§ Mr. Deputy Speaker
With this Amendment we may discuss the following Amendments: No. 17, in Clause 4, page 5, line 27, at end insert:(c) if the tenancy was granted partly in consideration of the payment of a sum other than the rent reserved under the tenancy in respect of the property, there shall be deemed to be included in the rent payable under the tenancy in respect of the property one fifteenth of such sum;No. 32, in Clause 9, page 12, line 25, after 'and', insert'other than in premium leases (as defined in section 37 of this Act) as';No. 41, in Clause 14, page 21, line 33, after 'house', insert'other than the tenant of a leasehold house holding under a premium lease as defined in section 37 of this Act';No. 77, in Clause 37, page 57, line 2, at end insert—(h) 'premium lease' shall mean a tenancy under the terms of which the payment of a premium was required;No. 78, in line 2, at end insert—(i) 'Premium' shall mean the payment of a capital sum on the grant of a tenancy not greater than the capitalised sum (calculated in accordance with Schedule 8 to this Act) of the difference between the actual rent reserved by the tenancy and the estimated rack rent of the premises on the day of the grant of the tenancy;and No. 80, new Schedule—(Calculation of capital sum)—For the purpose of calculating the capitalised sum referred to in section 37(1)(i) the basis of reference shall be Parry's Valuation Tables allowing interest on capital of seven per cent. and for the redemption of capital at two-and-a-half per cent.
§ Mr. Clegg
This Amendment and the Amendments which we are considering with it are designed to deal with a problem which we discussed in Committee and 1471 which we were quite unable to solve. It is the problem of the premium lease. In this Bill, as has been frequently stressed by the Minister, there are terms of compensation based on the principle that the landlord owns the land and the tenant owns the bricks and mortar on the land. Although I disagree with that principle in general, I wish to accept it for the purpose of the argument on premium leases.
In these Amendments we are concerned with the case where the tenant has neither built a house on the land himself or made any payment to the landlord, or someone else who may have built a house, for the bricks and mortar. That is the sort of problem which arises where the landlord, instead of accepting the normal rack rent for the premises, has accepted payment of a capital sum as premium with a low rent over a term of years.
I shall give an actual example which ilustrates more clearly the sort of problem with which we are faced. I have information about a small cottage-type property in Kensington with a present-day rentable value of £286. In 1939 it was let at 12s. 9d. a week inclusive, and during the war the rent rose to £80 a year. Later the property was modernised and improved and in 1958 it became available for reletting. The landlord offered the prospective tenant either a full repairing lease for seven years at a market rent of £225 a year, or a lease for 31 years at a rental of £80 a year on payment of a premium of £1,625. This premium was calculated on a 7 per cent. basis giving just over one year's rental of £145.
The tenant chose the premium with the low rental. It seems clear that in the premium which the tenant paid there was no question of his purchasing the bricks and mortar. He was taking another version of the market rent of the property. Applying the Minister's principles of compensation, that the landlord owns only the land and the tenant the bricks and mortar, it seems unfair in a case such as this that the tenant should have the right to enfranchisement. In this Amendment there are two ways of dealing with the problem. I apologise if there are technical defects in the drafting, but if I have managed to convince the Minister of the principle no doubt at a later stage he can put forward Amendments accepting the principle.
1472 The first method is set out in all the Amendments with the exception of Amendment No. 17. It seeks to distinguish between the case of a premium which in reality was a payment for the bricks and mortar and the case where there was a premium and a low rent which together made up a rack rent on the day when the lease was granted. These Amendments show what the premium would be.
The premium is then added to the capitalised sum of the actual rent, that is, the low rent, and if this does not exceed the capitalised rack rent the house should be excluded from the provisions of the Bill. What we have been trying to do by this Amendment, because we thought that in Committee this worried the Minister, is to make sure that enfranchisement is refused only in a case where it is clear beyond any doubt that there was no actual purchase by the tenant of the bricks and mortar and certainly that he did not build the house.
The second method is set out in Amendment No. 17. It is a somewhat simpler measure whereby we try to get the same result by adding to the rent reserve a one-fifteenth of the rent by premium. This would increase to about 7 per cent. We are not particularly wedded to this figure. It could go up to a twentieth and still perhaps be fair. In Committee my hon. Friend the Member for Basingstoke (Mr. David Mitchell) raised the problem of premium leases and the Minister was good enough to write to him expressing his views on the matter. I understand that the right hon. Gentleman does not think this Amendment necessary because the premium lease would breach the principle of the tenant owning the bricks and mortar. I think we have shown clearly that this is not so and that there can be cases where there is no question of the bricks and mortar principle arising.
I refer the right hon. Gentleman to a very interesting article in The Times today by the hon. and learned Member for Dulwich (Mr. S. C. Silkin). I am glad to see him present. The general purpose of this most interesting and thoughtful article I take to be that the Minister should take the Bill back and reconsider it. The article says:Four main arguments are levelled against this principle. First, it is said that the Bill's provisions do not guarantee that the principle 1473 applies only to houses built at the lessee's expense. It is true that as at present drafted the Bill may let in some marginal cases which are outside this principle. The Minister should certainly reconsider the definition.I hope that if he insists on driving the Bill through the House and sending it to another place, the Minister will think again about the question of premium leases. I am sure that unless he does something on this he will give the right to enfranchisement to tenants whom he does not think should have it.
§ Mr. Skeffington
We come once more to a subject which caused a good many discussions in Committee and which has been referred to under the heading of the premium lease. I congratulate the hon. Member for North Fylde (Mr. Clegg) on the series of Amendments in which he has sought very ingeniously to achieve the purpose of excluding this category of lease from the benefits—I stress the benefits—of the Bill for a very large number of leaseholders.
I shall not take any technical points about the drafting of the Amendment, but there are a number of practical points which if we acceded to the principle—and we do not—would prevent it achieving the purpose the hon. Member has in mind.
I must put on record, first, that there is a distinct difference in principle between the two sides of the House. Within the definitions in the Bill of what are long leases and low rent, we must include this category of lease, because, having considered the matter very carefully, we have come to the conclusion, as did the Minority Report of the Committee on Leaseholds, that in the majority of instances the characteristics, the unfairness, and the inequity in the leasehold system are generally as manifest in this type of lease as they are in any other.
If one examines, as I have, many of the cases where a lump sum was paid, which may be in association with all sorts of other conditions in the lease, one generally finds that in the majority of cases the lump sum is equal to the value of the house. This is so whether it is calculated in accordance with the suggestion made in Amendment No. 78 or by any other means. The lump sum or the premium calculated on a practical 1474 actuarial basis shows very little difference whether it is charged on a perpetual lease, on a 99-year lease, or on a 50-year lease. I am not saying that on very short leases this is always true. Certainly in a time of shortage of accommodation, in the majority and overwhelming number of cases the premium or lump sum is indeed equal to, and in some cases in excess of, the value of the house. Therefore, in the Government's view, in these circumstances it would be wrong to exclude this type of leaseholder from the benefits of the Bill. This is the point of principle which I must maintain.
I must point out some difficulties, though not in connection with the drafting. Indeed, I congratulate the hon. Gentleman on his drafting of this series of Amendments. The first difficulty is that in Amendment No. 78 the hon. Gentleman does not say on what basis the rack rent is to be calculated. Clearly, it should be estimated on the assumption that it is a repairing lease with obligations which are identical with the lease in question. If that is so, it makes a very considerable difference to the actual value of the rent which is being paid.
Secondly, an effort would have to be made to estimate what the rack rent would have been at the time of granting the lease. I have taken some advice on this. It is true that with shorter leases this is no doubt recorded, and there would not be any great difficulty. With older leases, this is bound to be very difficult and even controversial.
Thirdly, the capitalisation of the difference between the rack rent and the actual rent should be at interest rates ruling at the time of the grant of the lease, not at 1967 rates, which might be extremely unfair, although that is the proposition in the hon. Gentleman's proposed new Schedule.
Fourthly, one of the characteristics of leases—this is held to be one of their great advantages; I think that it is an advantage which is very much overestimated and which leaves much uncertainty —is their infinite character. To get the capitalisation of the difference between the rack rent and the actual rent and the premium, unless one knows what burdens were to be shared by the tenant and the landlord, one could arrive at an extremely inequitable result. As I said in answer 1475 to a proposition made by the hon. Member for Hendon, South (Sir H. Lucas-Tooth), in some cases one would be unfair to the landlord. In a greater number of cases, because of the repairing obligations, the unfairness would be on the tenant, because there is no way of bringing these calculations in a realistic way into the operation of this series of Amendments. There may be other burdens which the tenant has undertaken in relation to building or extensions as well as repairs.
Consequently, even if we accepted the principle of excluding premium leases, which we do not, this series of Amendments would not achieve the object in a practical way. It would be very difficult to arrive at a conclusion. If one did, it would be unfair to one party or the other. For all these reasons, much as we admire the hon. Gentleman's ingenuity, we cannot accept the principle and we must say that it is impractical as well.
§ Mr. S. C. Silkin (Dulwich)
I rise because the hon. Member for North Fylde (Mr. Clegg) was good enough to refer to certain comments I made in Committee and to seek support for his Amendments in those comments. He also referred to an article which appeared in a newspaper this morning which, I must confess, I, too, found very interesting and with whose contents I generally found myself in sympathy. I did not find, either in that article or in what I said in Committee, any real support for the Amendments.
As I understand it, the principle behind this series of Amendments is that, where a lessee undertakes in a lease to pay a ground rent and, in addition, undertakes to pay his lessor a capital sum which represents the difference between the occupation value and the land value of the premises, in such case the premises are to be excluded and the lease is to be excluded from the benefits of the Bill.
If that is right, there cannot be any ground for supporting that principle, because there cannot by any difference between the lessee who pays a lessor the capital sum, which is in effect the value of a house which is being built, and a lessee who pays a private builder, or a lessee who pays somebody who has erected a house and who then sells the leasehold interest at the cost of the house to the lessee. Therefore, it would make 1476 a most unreal distinction if, simply because this capital sum were transferred direct from the lessee to the lessor, rather than to some intermediary person, the benefits of the Bill were removed from the lessee in those cases.
The sort of case I had in mind when I made my remarks in Committee was a totally different type of case. The type of case I had in mind was the grant of a lease for a period of years, certainly in excess of 21 so that it would be caught by the Bill, but at a genuine occupation rent at the time, which in the course of years has become something less than two-thirds of the modern rateable value, where in fact the lessee did not contribute at all to the cost of the building, the whole of which was paid for by the lessor or by his predecessors in title. That is an entirely different case. I have endeavoured to deal with that matter in Amendment No. 108. I tried to deal with it in Committee by an Amendment which was applauded for its simplicity but criticised on almost every other ground. I accept the criticisms then made, and I have now sought a different way of doing it, which, I hope, we shall discuss in due course.
§ Mr. Allason
Very skilfully, the Parliamentary Secretary related this problem to very long leases, whereas the real issue is seen on shorter leases, as the hon. and learned Member for Dulwich (Mr. S. C. Silkin) has pointed out. It is difficult to relate the matter to the beginning of a 99-year lease. There is very little difference in value between a freehold and a 99-year lease, just a few £s, which can be said to be negligible. But this is not the point. At the beginning of a 99-year lease, when the landlord provides a house and the tenant, rather than buying the freehold of the house, deliberately accepts a 99-year lease at a low ground rent, paying a premium which is probably substantially less than the freehold value, this is a bargain clearly drawn between the parties on the understanding that the tenant will surrender the lease at the end of 99 years and the landlord will recover the premises. This is an entirely different circumstance from what the Minister is now achieving under the Bill.
The problem is seen to be much greater in relation to shorter leases. On a shorter lease, the premium is something paid to 1477 the landlord as a lump sum in lieu of payment of a rack rent for the period of the lease granted, say, 25 years. This is a convenience to both landlord and tenant, a lump sum being paid rather than a considerable sum being paid in rent each year out of taxed income. The landlord has provided the house, and the tenant acquires it merely by paying a lump sum in lieu of rent.
The Parliamentary Secretary said that the premium was roughly equal to the value of the house, but he then qualified that by saying "except in very short leases". I take it that by that he meant very short long leases, that is, about 25 years. But this is the essence of the matter. If the Government can make a change here which will leave out the very long leases, we might be nearer to agreement. I agree that it would be difficult to draft such a provision, but the Parliamentary Secretary has admitted that, in the cases of leases under 50 years, there is an injustice here to the landlord in terms of compensation, and it is that injustice which the Amendment would put right.
§ Amendment negatived.
§ 6.15 p.m.
§ Mr. Graham Page
I beg to move Amendment No. 2, in page 1, line 10, after 'residence', to insert 'at the relevant time'.
This is a simple point of drafting. In Committee, we added to this subsection the provision that a tenant might qualify for enfranchisement if he resided in the house not only for the last five years before giving his notice but also if he had resided in the house for five years during the last 10 years. It needs no great mathematical brain to realise that, unless we make the matter clear, there might be two tenants entitled to enfranchise. Each might have resided there for exactly five years in the last 10. This may sound incredible, but it might easily be a matter carefully worked in order to carry out an enfranchisement.
The problem could have been solved, perhaps, by saying "more than five years", but I cannot refer to that Amendment because we are not discussing it. It can be solved by saying that the tenant who gives notice must be in residence at the relevant time, that is, at the moment 1478 of giving notice, and he must, therefore, be the last five-year man, if I may put it like that. There could not then be two people entitled to enfranchise.
§ Mr. Willey
The hon. Gentleman the Member for Crosby (Mr. Graham Page) has expressed himself more moderately than he did on another occasion. Because of his previous expression of opinion, I thought it wise to take the best advice available. That advice is to the effect that the Amendment is otiose. I had better stick to my brief. It says that the Amendment is otiose because Clause 1(1)(b) lays down that the tenant has this right where he has at the relevant time been occupying the house as his residence for the last five years, and these words "has been occupying" imply that he is still occupying. For these reasons, I am advised not to accept the Amendment.
§ Mr. Graham Page
For the life of me. I cannot see how "has been occupying" means that he is still occupying. However, I shall not press the matter to a Division. On the Minister's assurance, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
I beg to move Amendment No. 3, in page 1, line 10, to leave out 'for fair compensation' and to insert 'on fair terms'.
§ Mr. Speaker
With this Amendment we can discuss Amendment No. 31, in Clause 9, page 12, to leave out lines 24 to 28 and to insert:(a) (i) that the vendor is selling for an estate in fee simple at a price to be assessed in accordance with section 5 of the Land Compensation Act 1961,(ii) that that estate is subject to the tenancy and to the rights of a tenant of the house and premises under Part I of the Landlord and Tenant Act 1954 but not to require an extended lease under this Act,(iii) that the vendor is selling an estate in respect of which there is a right of development or redevelopment (with other property if the vendor owns any other property capable of development or redevelopment with the house and premises the subect of the tenancy) for any of the purposes for which planning consent might reasonably be exepected to be granted, and(iv) that the number of persons seeking to purchase similar houses and premises in the locality is not substantially greater than the number of such houses and premises in the locality which are available for purchase.
§ Mr. Graham Page
On a point of order, Mr. Speaker. First, will you be good enough to say whether you will allow a Division on Amendment No. 31 when we reach it? Second, I invite you to say that we may discuss with Amendment No. 3 Amendment No. 33 also, in Clause 9, page 12, line 28, at the end to insert:'but that it contained a provision that either at the date twenty-five years before the original term date or at the relevant time (whichever is the later) the rent would be the letting value of the site ascertained in accordance with section 15(2)(a)'.Amendment No. 33 is closely connected with the subject of both Amendment No. 3 and Amendment No. 31.
§ Mr. Speaker
That seems to be a quid pro quo, if the House has no objection. Very well. We will take Amendments Nos. 31 and 33 with Amendment No. 3, and, as the hon. Gentleman has asked for it, I am prepared to allow a Division on Amendment No. 31.
§ Mr. Willey
Amendment No. 3 is a drafting Amendment. I accepted an Amendment proposed by the hon. Member for Crosby (Mr. Graham Page) in Standing Committee, and I said that we might have to revise the words accordingly. This I am now doing, on advice.
§ Mr. Peyton
This drafting Amendment, as the Minister cunningly calls it, is the beginning of the very tricky part of the Bill. We have always objected to the Bill on the ground that the compensation is so unfair that acquisition of the property in many cases amounts to confiscation. It was for this reason that I was sorry that the Opposition did not vote against the Bill straight. In saying that, I do not suggest for a moment that there are not severe problems to be met in various parts of the country. But I believe it to be fundamentally wrong that in a free society one man's property should be taken away without adequate compensation and given to another, particularly when we find that the only reason is that the latter is more numerous.
I do not understand the right hon. Gentleman's reasoning here. I understand that the Government have throughout sustained the argument that their proposals make fair and adequate compensation possible. The fact that they wish to alter these words seems to me 1480 to suggest a guilty conscience. The right hon. Gentleman naively suggests that he is not covering up a guilty conscience but is just tidying up the drafting. It is at this sort of moment that one feels that his right hon. Friend the Minister of Housing and Local Government is very prudent and well-advised. He appeared on the Front Bench only for a moment during an uncontentious episode earlier in the afternoon. How sensible and wise he is to stay away now, and leave his right hon. Friend to bear the burden of the argument.
§ Mr. Speaker
Order. We must discuss the Amendment before us. The hon. Gentleman sees it on the Notice Paper.
§ Mr. Peyton
My generosity led me to congratulate the Minister on staying away from this embarrassing argument. But I shall not press the point.
I believe it to be wholly wrong—and I say so with conviction—that the Minister should suggest that this is only a drafting Amendment. Fair compensation is not allowed by the Bill, and I imagine that that is the reason—it is the only real reason that I can see—for the Minister objecting to those words being in the Bill and to want to go back to the vaguer terminology of "fair terms".
I do not believe that the argument need be prosecuted at great length. The right hon. Gentleman is showing signs of feeling guilty of the charge we have made all along of gross unfairness amounting to confiscation and an action which should never be permitted in a free society because it is wholly inimical to freedom. I very much hope that my hon. Friend the Member for Crosby (Mr. Graham Page), who has conducted the case against the Bill with such skill throughout, will echo the condemnation which I have tried most inadequately to utter, and that he will advise all hon. Members on this side of the House to go into the Division Lobby without hesitation.
§ Mr. Graham Page
I can assure my hon. Friend that that is exactly what I shall do.
I think that the right hon. Gentleman's statement that this was a drafting Amendment was the saying of the week, month or even the year. He says that it is a drafting Amendment, when he admits that compensation is not fair! He wants to remove from the Bill the statement 1481 that compensation under it is fair. I know that the right hon. Gentleman is patently honest, and I agree that if the Bill remains as it is I would support the Amendment. But I hope that the Bill will not remain as it is. As it is, the compensation is not fair, even within the principle which the Government accept of the tenant owning the bricks and mortar and the landlord owning the land. It is not fair even on that principle because it considers only what is being taken from the landlord, and not the asset which is being acquired by the tenant.
What happens when the tenant enfranchises? He gets the freehold of the land and the bricks and mortar with it. He is put in the position, if he so wishes, to let that property on a further long lease and at a modem ground rent. The property may originally have been let on a long lease many years ago for a very small ground rent. On enfranchisement, if the tenant acquires the freehold he acquires the right to let at the modern rent. This is recognised in another part of the Bill, and where the tenant takes a 50-year lease instead of taking the freehold it is subject to rent revision clauses every 25 years.
In an effort to make the Government's principles fair within themselves, we put down Amendment No. 33. We are looking to the point that the tenant is acquiring something by taking the freehold; we are not looking to the value of the asset which the landlord is losing so much as the value of the asset the tenant acquires. We disregard altogether the value of the bricks and mortar, as the Government desire, and treat only the land. But the tenant is getting that land so that he can relet at a modern ground rent, and the difference between the old and modern ground rent is recognised in other Clauses. In order to reach that modern ground rent we should assume that there is a rent revision clause in the existing long lease taking effect about 25 years before its end or at the date when he gives notice to enfranchise and take the freehold. This seems to me a perfectly fair formula on which compensation should be granted. It values the asset which goes to the tenant on the basis of the Government's principles. Without such a formula, the compensation is unfair, even on the Government's principles.
But we go much further than that. We have said throughout the debates on 1482 the Bill that the property which is transferred to the tenant should be paid for at its proper market value, and in Amendment No. 31 we have tried to spell out that market value fairly. The formula in Amendment No. 31 has four parts. The first is that the assumption shall be that the vendor is selling for an estate in fee simple and on the ordinary basis of compensation under the Land Compensation Act, 1961. That means that he is selling subject to the existing long lease at the market value for his freehold interest. That is the first figure one reaches—the normal compensation which has always been recognised in our law and by Parliament as being proper when we take property for the benefit of the community.
If it is right when we are taking property for the benefit of the community, surely it is right when we are taking it for the benefit of one individual that that compensation should apply? But it must be modified by the other three points in Amendment No. 31. First, we must recognise that under the existing law the tenant on a long lease has a right to remain in possession at the end of it as a statutory tenant, under the Act of 1954, if he is in residence at the end of that long lease. That is recognised, and the value of the property would accordingly be reduced under the second part of the formula set out in Amendment No. 31.
Sub-paragraph (iii) deals with the development value of the property. I am still in doubt as to whether the Bill includes development value in the compensation to be given to the landlord. The right hon. Gentleman gave us a number of conclusions on this point during the Committee stage. He assured us that the landlord would be getting development value in the money paid to him for his interest. I would like to ensure that this is so by setting it out in words and have done so in sub-paragraph (iii) of Amendment 31. Will the right hon. Gentleman deal with this point again? It may have been explained in Committee but there are people outside who are still in great doubt about it and if the Government can give any help on that alone this debate will have been useful.
Sub-paragraph (iv) of Amendment No. 31 is to the effect that, if the landlord is 1483 entitled to the present market value of his estate, it may well be said that he is getting in that payment a certain value for the scarcity of dwellings at the present time. This is a point which we recognised in the Rent Act, 1965, when dealing with tenanted property. Of course there is a scarcity value in the sale and purchase of freeholds. Therefore, to be fair to the tenant I have added sub-paragraph (iv), which says:that the number of persons seeking to purchase similar houses and premises in the locality is not substantially greater than the number of such houses and premises in the locality which are available for purchase.That should be taken into account in ascertaining the figure of compensation for the vendor. The House should recognise the phrasing. It comes from the Rent Act, 1965, and is applied to freeholds rather than to leaseholds, as in the Rent Act. It takes into account scarcity value.
§ Mr. S. C. Silkin
Can the hon. Gentleman say whether that provision to eliminate scarcity is intended to apply only additionally to the occupation value of the standing house or in addition to the scarcity element in development or redevelopment value derived from Schedule 2?
§ Mr. Graham Page
In drafting the Amendment, I was tempted to include the word "estate" in sub-paragraph (iv), which might have answered the point put by the hon. and learned Gentleman. But I feared that we should be getting into too many legal discussions if I did so. I merely want to say that scarcity value should be disregarded, and disregarded in the case of site and therefore in the development value as well. There may be a substantial development value even if one discounts scarcity. There is still the value of the development of the plot. But this would be unfair to the right, which we recognise, of the resident tenant in his possession of the house. He is residing there at present and therefore it should not be assumed that the place is vacant and that it comes into the market at the value of other vacant property.
§ Sir Harmar Nicholls (Peterborough)
These Amendments are perhaps the most important we have to consider. Can my hon. Friend give an example? One fol- 1484 lows the argument, which is a typically Committee argument, but my hon. Friend has said that people outside do not understand it. They are more likely to do so if he could give hypothetical cases and let them be disproved, if possible, by the right hon. Gentleman.
§ Mr. Graham Page
I would like to be able to give a number of hypothetical cases, but so much depends in any example on the length of the lease and the various permutations one has to apply. I will put it as simply as I can.
Amendment No. 31 asks for market value for a landlord's interest which is to go to the tenant. It asks for that market value having regard to certain things which should be taken into account. Normally, a tenant will have a right to continue in occupation under a statutory tenancy, and the Amendment takes into account that he should not be asked to pay scarcity value because he is already the sitting tenant. I am sure that this is really fair to both parties. It is the basis on which we would have brought forward our proposals for leasehold enfranchisement. We have said throughout that we cannot support the Bill while it fails to compensate properly for the interest of the landlord.
§ Mr. Evan Luard (Oxford)
The hon. Gentleman has explained in great detail what he regards as the defects of the proposal for compensation in the Bill and he has explained the Oppositon's alternative proposal. Is it the intention of the Conservative Party, if it is returned to power, to introduce legislation implementing the treatment of compensation on a basis similar to the one he is now describing?
§ Mr. Graham Page
It depends on what occurs in the meantime. If a later Amendment on the Order Paper were accepted to postpone the effect of the Bill for two years, I would answer "yes". But I am not going to be as wild as the party opposite was in the 1964 election, when it said that it would repeal the Rent Act, 1957. In office, the Government only repealed one paragraph of Schedule 12 of the Act.
§ Mr. Speaker
Order. The hon. Member for Crosby (Mr. Graham Page) usually keeps strictly to his Amendments. He must now do so.
§ Mr. Graham Page
I will do so, Mr. Speaker. I was tempted to stray off them. I need not labour the point further. Our Amendments provide market value for the landlord's interest. I have endeavoured to show that, even on the basis on which the Government have put forward the Bill, the compensation is not fair and that they should provide for such a formula as is contained in Amendment No. 31.
Amendment No. 3 is a drafting Amendment because, as the hon. Member for Crosby (Mr. Graham Page) will recall, he moved the insertion of the words "for fair compensation" in Committee and I am now substituting the words "on fair terms" for drafting reasons. Here, there might be some confusion if we referred to compensation. The Committee was agreed that the word "fair" should be there.
On Amendments No. 31 and 33, the Opposition must make their choice because the effect of Amendment No. 31 would be that the price would be more than the market value. This must be so if the ground rent is increased. They are asking us to pay market value or more than market value.
I think that Amendment No. 31 will not be moved when the time comes because it has a second disadvantage in that it would discourage enfranchisement until the very end of the lease, and I am sure that neither side would wish to persuade the leaseholder to delay enfranchisement until the lease was running out.
I need not deploy further the argument about market value. It ran throughout our proceedings in Committee. We believe that market value is not a fair price. We do not believe that it is fair that the leaseholder should pay twice for the building. This is what divides us.
What we provide—and this distinction has been brought out by taking these Amendments together—is that, at the expiry of the current lease, the leaseholder should have the advantage of the extension at a modern ground rent. It is upon this that the Opposition should focus their attention. In Committee, the hon. Gentleman, to his credit, faced the dilemma and brought out the difference between the two sides most clearly, because he said that the extension should 1486 not only be on a modern ground rent but at a premium as well. One has only to think for a moment to realise that this means that the premium is compensation for something that the leaseholder is not obtaining.
I can do no more than say that this is a clear distinction which has divided the two sides since we began our discussions, not on the White Paper—there was no Division on the White Paper—but on the Bill which implements the White Paper. We say that the price for the freehold should not be on present market values, but the fair value, including the development value, of the land alone.
§ Mr. Maddan
My hon. Friend particularly pressed the Minister to give us an assurance about development value and he referred to proceedings in Committee. I think it is Clause 19, Clause 17 and a Schedule which have to be read together.
§ Mr. Willey
The hon. Gentleman will find the reference in column 382 prefaced by the line,MR. MADDAN: Where? "—[OFFICIAL REPORT, Standing Committee B, 25th April, 1967; c. 382.]
§ Mr. Maddan
I am not put off by that. There are various sorts of development values. There is the natural increment in the land which comes from development in the whole area. It is possible under these terms that the landlord gets some recognition of that increment taking place over time. What he will not get under the Bill as it is at present drafted, including the Amendment, is the extra or second type of development value which comes from a change of user in the land.
I will give an example of a lease which has 35 years to run on a plot of land with one house which specifically requires the usage of that land to be confined to that one house. Under the terms of the Bill, the assumption is made that 50 years is added to the 35 years when determining the price. The leaseholder then enfranchised. At any time within that 85 years it is permissible under the Bill for the enfranchised leaseholder to go to the local planning authority and, even if it is a well-managed estate, get the consent of the estate to redevelop that land not for the user provided for in the 1487 current lease—one house—but perhaps for four houses.
That second type of development value is something which in equity belongs to the landlord. Yet under all those provisions scattered about in the Bill, as I read it, the landlord will not get any compensation or terms, or whatever we call them, for that type of development value and it is about that that I would like to hear an explanation from the right hon. Gentleman.
§ Mr. Hooson
The fallacy in the argument of the Opposition is to equate market value for fair terms. We are trying to remedy an evil which has existed for a long time. Market value today is an enhanced value because of the existence of the leasehold system. It has always been unfair to the leaseholder. If one were to change the terms of the Bill to allow for compensation on the
§ terms of the modern market value one would be compensating the landlord and giving him the full benefit of the leasehold system as it has always existed.
§ The hon. Member for Hove (Mr. Maddan) asked earlier if I thought the price of the compensation to charities was fair. I believe it is fair as provided by the Bill. The interest of the landlord has increased in value because he will have the lease falling in eventually and would then sell the lease again or renew it at a high premium. This was a grossly unfair system. The Bill is putting a matter right which has been wrong for many years. What the Conservatives suggest would not put it right and it would be grossly unfair to the leaseholder not to allow the Amendment to go through.
§ Question put, That the words "for fair compensation" stand part of the Bill:—
§ The House divided: Ayes 118, Noes 205.1489
|Division No. 373.]||AYES||[6.45 p.m.|
|Allason, James (Hemel Hempstead)||Hamilton, Michael (Salisbury)||Osborne, Sir Cyril (Louth)|
|Astor, John||Harris, Reader (Heston)||Page, Graham (Crosby)|
|Balniel, Lord||Harrison, Col. Sir Harwood (Eye)||Page, John (Harrow, W.)|
|Bell. Ronald||Harvey, Sir Arthur Vere||Pearson, Sir Frank (Clitheroe)|
|Bennett, Sir Frederic (Torquay)||Heald, Rt. Hn. Sir Lionel||Peyton, John|
|Biffen, John||Heseltine, Michael||Pink, R. Bonner|
|Bossom, Sir Clive||Higgins, Terence L.||Powell, Rt. Hn. J. Enoch|
|Boyd-Carpenter, Rt. Hn. John||Hogg, Rt. Hn. Quintin||Prior, J. M. L.|
|Brewis, John||Holland, Philip||Pym, Francis|
|Brinton, Sir Tatton||Hunt, John||Quennell, Miss J. M.|
|Brown, Sir Edward (Bath)||Hutchison, Michael Clark||Renton, Rt. Hn. David|
|Bruce-Gardyne, J.||Irvine, Bryant Godman (Rye)||Ridley, Hn. Nicholas|
|Bryan, Paul||Jennings, J. C. (Burton)||Rippon, Rt. Hn. Geoffrey|
|Buck, Antony (Colchester)||Jones, Arthur (Northants, S.)||Rossi, Hugh (Hornsey)|
|Bullus, Sir Erie||Jopling, Michael||Russell, Sir Ronald|
|Campbell, Gordon||King, Evelyn (Dorset, S.)||Scott, Nicholas|
|Carlisle, Mark||Lambton, Viscount||Sharpies, Richard|
|Cary, Sir Robert||Lancaster, Col. C. G.||Shaw, Michael (Sc'b'gh & Whitby)|
|Clegg, Walter||Lewis, Kenneth (Rutland)||Smith, John|
|Cooke, Robert||Lloyd, Rt. Hn. Selwyn (Wirral)||Stainton, Keith|
|Costain, A. P.||Loveys, W. H.||Stoddart-Scott, Col. Sir M. (Ripon)|
|Craddock, Sir Beresford (Spelthorne)||MacArthur, Ian||Summers, Sir Spencer|
|Dean, Paul (Somerset, N.)||Maclean, Sir Fitzroy||Taylor, Edward M.(G'gow, Cathcart)|
|Deedes, Rt. Hn. W. F. (Ashford)||McMaster, Stanley||Thatcher, Mrs. Margaret|
|Digby, Simon Wingfield||Maddan, Martin||Tilney, John|
|Dodds-Parker, Douglas||Maginnis, John E.||Turton, Rt. Hn. R. H.|
|Elliott,R.W.(N'ctle-upon-Tyne, N.)||Marten, Neil||Vaughan-Morgan, Rt. Hn. Sir John|
|Emery, Peter||Maxwell-Hyslop, R. J.||Walker-Smith, Rt. Hn. Sir Derek|
|Eyre, Reginald||Maydon, Lt.-Cmdr. S. L. C.||Wall, Patrick|
|Farr, John||Mills, Peter (Torrington)||Walters, Dermis|
|Fletcher-Cooke, Charles||Miscampbell, Norman||Ward, Dame Irene|
|Fortescue, Tim||Mitchell, David (Basingstoke)||Webster, David|
|Gibson-Watt, David||Monro, Hector||Whitelaw, Rt. Hn. William|
|Glyn, Sir Richard||Munro-Lucas-Tooth, Sir Hugh||Wills, Sir Gerald (Bridgwater)|
|Goodhart, Philip||Murton, Oscar||Wolrige-Gordon, Patrick|
|Goodhew, Victor||Nabarro, Sir Gerald||Worsley, Marcus|
|Grant, Anthony||Nicholls, Sir Harmar|
|Gresham Cooke, R.||Noble, Rt. Hn. Michael||TELLERS FOR THE AYES:|
|Grieve, Percy||Onslow, Cranley||Mr. Jasper More and|
|Griffiths, Eldon (Bury St. Edmunds)||Orr-Ewing, Sir Ian||Mr. Bernard Wearherill.|
|Halt, John (Wycombe)||Osborn, John (Hallam)|
|Abse, Leo||Allen, Scholefield||Bagier, Gordon A. T.|
|Albu, Austen||Anderson, Donald||Barnes, Michael|
|Allaun, Frank (Salford, E.)||Atkins, Ronald (Preston, N.)||Barnett, Joel|
|Beaney, Alan||Harper, Joseph||Owen, Will (Morpeth)|
|Bence, Cyril||Harrison, Walter (Wakefield)||Padley, Walter|
|Bennett, James (G'gow, Bridgeton)||Herbison, Rt. Hn. Margaret||Paget, R. T.|
|Bidwell, Sydney||Hilton, W. S.||Palmer, Arthur|
|Binns, John||Hooley, Frank||Pannell, Rt. Hn. Charles|
|Blackburn, F.||Hooson, Emlyn||Parkyn, Brian (Bedford)|
|Blenkinsop, Arthur||Homer, John||Pavitt, Laurence|
|Boardman, H.||Howarth, Harry (Wellingborough)||Pearson, Arthur (Pontypridd)|
|Bowden, Rt. Hn. Herbert||Hoy, James||Pentland, Norman|
|Braddock, Mrs. E. M.||Huckfield, L.||Perry, Ernest G. (Battersea, S.)|
|Bradley, Tom||Hughes, Rt. Hn. Cledwyn (Anglesey)||Price, Thomas (Westhoughton)|
|Brown, Hugh D. (G'gow, Provan)||Hughes, Emrys (Ayrshire, S.)||Price, William (Rugby)|
|Buchan, Norman||Hughes, Hector (Aberdeen, N.)||Probert, Arthur|
|Butler, Herbert (Hackney, C.)||Hughes, Roy (Newport)||Pursey, Cmdr. Harry|
|Butler, Mrs. Joyce (Wood Green)||Hunter, Adam||Rankin, John|
|Cant, R. B.||Hynd, John||Rees, Merlyn|
|Carmichael, Neil||Irvine, A. J. (Edge Hill)||Reynolds, G. W.|
|Castle, Rt. Hn. Barbara||Jeger, Mrs.Lena(H'b'n & S.P'cras,S.)||Rhodes, Geoffrey|
|Coe, Denis||Johnson, Carol (Lewisham, s.)||Richard, Ivor|
|Coleman, Donald||Jones, Dan (Burnley)||Roberts, Albert (Normanton)|
|Concannon, J. D.||Jones, J. Idwal (Wrexham)||Robinson, W. O. J. (Walth'stow, E.)|
|Jones, T. Alec (Rhondda, West)|
|Conlan, Bernard||Judd, Frank||Rogers, George (Kensington, N.)|
|Corbet, Mrs. Freda||Kelley, Richard||Rose, Paul|
|Craddock, George (Bradford, S.)||Kerr, Mrs. Anne (R'ter & Chatham)||Rowland, Christopher (Meriden)|
|Crawshaw, Richard||Kerr, Russell (Feltham)||Rowlands, E. (Cardiff, N.)|
|Crossman, Rt. Hn. Richard||Lawson, George||Ryan, John|
|Dalyell, Tam||Leadbitter, Ted||Sheldon, Robert|
|Davidson, Arthur (Accrington)||Ledger, Ron||Shinwell, Rt. Hn. E.|
|Davidson, James(Aberdeenshire, W.)||Lee, Rt. Hn. Frederick (Newton)||Shore, Peter (Stepney)|
|Davies, G. Elfed (Rhondda, E.)||Lee, John (Reading)||Short, Rt.Hn.Edward (N'c'tie-u-Tyne)|
|Davies, Ednyfed Hudson (Conway)||Lever, Harold (Cheetham)||Short, Mrs. Renée (W'hampton, N.E.)|
|Davies, Harold (Leek)||Lewis, Arthur (W. Ham, N.)||Silkin, Rt. Hn. John (Deptford)|
|Davies, Ifor (Gower)||Lipton, Marcus||Silkin, Hn. S. C. (Dulwich)|
|Davies, S. O. (Merthyr)||Lomas, Kenneth||Silverman, Julius (Aston)|
|Dell, Edmund||Loughlin, Charles||Silverman, Sydney (Nelson)|
|Dempsey, James||Luard, Evan||Skeffington, Arthur|
|Dobson, Ray||Lubbock, Eric||Slater, Joseph|
|Doig, Peter||Lyon, Alexander W. (York)||Snow, Julian|
|Donnelly, Desmond||McBride, Neil||Spriggs, Leslie|
|Dunwoody, Mrs. Gwyneth (Exeter)||Macdonald, A. H.||Steel, David (Roxburgh)|
|Dunwoody, Dr. John (F'th & c'b'e)||McGuire, Michael||Steele, Thomas (Dunbartonshire, W.)|
|Eadie, Alex||McKay, Mrs. Margaret||Stonehouse, John|
|Edwards, Rt. Hn. Ness (Caerphilly)||McMillan, Tom (Glasgow, C.)||Thornton, Ernest|
|Ensor, David||MacPherson, Malcolm||Thorpe, Rt. Hn. Jeremy|
|Evans, Albert (Islington, S.w.)||Mahon, Peter (Preston, S.)||Tinn, James|
|Evans, loan L. (Birm'h'm, Yardley)||Manuel, Archie||Varley, Eric G.|
|Faulds, Andrew||Mapp, Charles||Wainwright, Edwin (Dearne Valley)|
|Finch, Harold||Marquand, David||Watkins, David (Consett)|
|Fitch, Alan (Wigan)||Mayhew, Christopher||Watkins, Tudor (Brecon & Radnor)|
|Foley, Maurice||Mellish, Robert||Weitzman, David|
|Foot, Michael (Ebbw Vale)||Milter, Dr. M. S.||Wells, William (Walsall, N.)|
|Forrester, John||Milne, Edward (Blyth)||Whitaker, Ben|
|Fowler, Gerry||Molloy, William||White, Mrs. Eirene|
|Fraser, John (Norwood)||Morgan, Elystan (Cardiganshire)||Whitlock, William|
|Gardner, Tony||Morris, Alfred (Wythenshawe)||Willey, Rt. Hn. Frederick|
|Garrett, W. E.||Morris, Charles R. (Openshaw)||Williams, Alan (Swansea, W.)|
|Gray, Dr. Hugh (Yarmouth)||Moyle, Roland||Williams, Alan Lee (Hornchurch)|
|Greenwood, Rt. Hn. Anthony||Murray, Albert||Williams, Clifford (Abertillery)|
|Gregory, Arnold||Neal, Harold||Winnick, David|
|Grey, Charles (Durham)||Norwood, Christopher||Winstanley, Dr. M. P.|
|Griffiths, David (Rother Valley)||Oakes, Gordon||Winterbottom, R. E.|
|Griffiths, Rt. Hn. James (Llanelly)||Ogden, Eric||Woodburn, Rt. Hn. A.|
|Hale, Leslie (Oldham, w.)||O'Malley, Brian||Woof, Robert|
|Hamilton, William (Fife, W.)||Orbach, Maurice|
|Hamling, william||Orme, Stanley||TELLERS FOR THE NOES:|
|Hannan, William||Oswald, Thomas||Mr. William Howie and|
|Mr. Ernest Armstrong.|
§ Proposed words there inserted in the Bill.
§ Mr. Willey
I beg to move Amendment No. 4, in page 1, line 12, after 'rent', to insert:'and the rateable value of the house and premises on the appropriate day is not (or 1490 was not) more than £200 or, if it is in Greater London, than £400'.
§ Mr. Speaker
I propose that with this Amendment we should take Amendment No. 5, in page 1, line 12, after 'rent' insert:'and the rateable value of the house and premises on the appropriate day is not (or was not) more than £300 or if it is in Greater London than £500'.1491 Amendment No. 99, in line 12, after 'rent', insert:'and the rateable value of the house and premises on the appropriate day is not (or was not) more than £400Amendment No. 9, in page 2, line 26, at end insert:(4) In subsection (1)(a) above, 'the appropriate day', in relation to any house and premises, means the 23rd March 1965 or such later day as by virtue of section 43(3) of the Rent Act 1965 would be the appropriate day for purposes of that Act in relation to a dwelling house consisting of that house.and the two Amendments to Amendment No. 4, after 'premises', insert:'(other than any house and premises being within an area in respect of which the Minister has granted a certificate under section 19 of this Act)'and leave out '£200' and insert '£300'.
§ Mr. Willey
I did not expect to be in the position of defending and justifying the lone stand of the hon. Member for Crosby (Mr. Graham Page). On the other hand, I have the consolation of inviting the House to return to the purity of the White Paper.
What I am asking the House to do is to return to the provision, which we suggested in the White Paper, confining the Bill to houses of a rateable value within the Rent Act limits. This issue was very much discussed both on Second Reading and in Standing Committee when I said that I found myself in some difficulty about Amendments then suggested. I was. I said that I would be willing to consider the matter again—I do not want to minimise my difficulties—and I then said that I considered the provisions of those Amendments to be too restrictive.
We have considered them again. The essential difficulty is that which I emphasised in Standing Committee and which is that one has to be hesitant and cautious about how far one should go in rectifying contracts which have already been made between the parties. There is a whole host of legislative precedent for intervening in contracts between parties, but in such circumstances one has to look to the areas of hardship. For that reason, in the White Paper we followed the precedent of the limits of the Rent Act.
There were two major alternatives. The first was to have no limits at all, which was argued on grounds of logic and con- 1492 sistency in Standing Committee, particularly by my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin). However, although that might be a more logical approach, one would have to be cautious that it did not carry rectification of the contract too far in the sense of taking it to unnecessary limits, especially if one paid regard to hardship.
The other difficulty of removing the limits was that by doing so one brought two types of property much more prominently into the range of the Bill. These are mixed premises and premises which, although used as residential premises, are in character really investment properties. Although the leaseholder himself might live in them, they could be boarding houses, or sub-let, thus being more investment premises than the main residence of the leaseholder. There is also the difficulty of the definition of predominant use, or some such character, of the premises which would make it difficult to accept the complete abolition of limits.
We therefore considered all the various combinations and permutations of limits. If we accept having some limits, then all the arguments against the limits of the Rent Act will apply—the border-line cases and the anomalies—and one is driven to the conclusion that the most defensible line is the limits drawn by the Rent Act.
For those two reasons—the doubts of the need to go as far as abolishing limits altogether, with the difficulty of devising satisfactory definitions of the categories of properties which ought not to fall within the Bill and, secondly, the difficulty of justifying any other limits against the present Rent Act limits—we were driven back to where we began. I invite the House to accept the original limits and to agree that the Government were right in the first place.
§ 7.0 p.m.
§ Mr. John Boyd-Carpenter (Kingston-upon-Thames)
First of all, as this is the first time that I have taken part in the debates on the Bill at this stage, I must again declare my somewhat complicated interests as, on the one hand, the tenant of a leasehold house, grossly over-valued by the Inland Revenue, and secondly, as a director of a property company. Despite these complicated qualifications, or disqualifications, I welcome the right hon. Gentleman's reconversion.
1493 One might be inclined to introduce the hackneyed reference to St. Paul if one had not a much more recent example of a sudden Ministerial conversion, so I will content myself with saying that the right hon. Gentleman's conversion is the most dramatic one that we have had in this House since the Foreign Secretary yesterday decided to return to sanity in connection with Aden.
The right hon. Gentleman's reasons were, as is often said of the reasons given by lay magistrates for perfectly sound decisions, really rather damaging to the decision itself. The great Willey principle:The bricks in equity belong to the leaseholder and only the site to the landlordabout which we heard in the White Paper and on Second Reading, seems to have wilted a little in enthusiasm when he now says that it is better not to carry rectification further than one must. There is not exactly the zeal of the great reformer who has seen a splendid principle, which such amateurs as the professional committees who looked at this never saw. Instead he says one must not carry this further than one must. What tremendous zeal!
There are very good reasons why we welcome the reimposition of these limits. I am particularly glad to have the chance of giving them because, apparently, in some quarters, I have been regarded as the right hon. Gentleman's secret weapon in this respect. The right hon. Gentleman may find me a little difficult to identify in that role, but I am particularly anxious to say why I am pleased that the right hon. Gentleman has returned, not to sanity but at any rate to a condition of semi-coma.
As I said in reply to an intervention by the hon. and learned Gentleman the Member for Dulwich (Mr. S. C. Silkin) on Second Reading, being, as I am, completely opposed to the principles of this Bill, which I believe are frankly malicious and confiscatory, I want to see its scope as limited as possible. I would be much happier to see much lower limits; but any limit is better than none, any restriction of the scope of the Bill must be good because it diminishes the scope of injustice.
Secondly the introduction of this limit completely blows the gaff on the great 1494 Willey principle. All this edifice that has been erected about the leaseholder having built the house and it being a robbery for the landlord to take it back at the end of the term; all the remarks of hon. Gentlemen below the Gangway about how it was confiscation for the reversioner to resume possession of his property—all that kind of thing is shown up as the arrant nonsense that it is when it becomes clear that this immutable principle mutates at rateable values of £400 and £200 a year. The right hon. Gentleman saw this point, according to the report of the Committee.
It is therefore a particularly good thing that the right hon. Gentleman has now come down and now faces rectification as far as one must. In other words he has given way, as far as he must, to the pressures from South Wales and from behind him, and is not now to be the apostle of a great and brilliant new principle. It is very satisfying, in practical terms, that the right hon. Gentleman should have done this, although I am bound to say that I agree, in his doing it, with what is said in a most interesting article in The Times today, written by the hon. and learned Member for Dulwich. He says:The embarrassed Minister must sacrifice logic to expediency.That is what his own hon. and learned Friend thinks—I believe absolutely correctly. What an embarrassment this is for the right hon. Gentleman. In Committee, and I have read the reports very carefully, he did not just acquiesce in what was being done, he voted for the Amendment to take the limits out. It is fair to say that the only person who had the consistency of principle to oppose it and to go into the Lobby against it was, as one would have expected, my hon. Friend the Member for Crosby (Mr. Graham Page).
It is quite true that the right hon. Gentleman, in seeking to justify his attitude said this:That is why I prefer to leave it that we will put something down on Report that will afford the opportunity for further debate."— [OFFICIAL REPORT, Standing Committee B, 11th April, 1967; c. 82.]He need not worry about that. Would anyone have thought, when the right hon. Gentleman said that, when he said that 1495 the Bill would be altered in a major feature, that he would accept the Amendment and put something down on Report which would give rise to further debate, that what the hon. Gentleman meant was that he would restore the Bill to its original form, and himself come forward to advocate the reintroduction of the precise provision which, a few moments later, he was to vote to excise from the Bill? Would anyone have thought that that was the right hon. Gentleman's meaning, or indeed that that was the way in which the Minister in charge of a Bill should conduct it?
We would like to know a little more about the reasons, first for the right hon. Gentleman's original change of mind, and secondly for his change back. Will he tell us now what representations were made to him to take these limiting words out of the Bill in the first place? Will he tell us why, when he considered the Amendment on the Notice Paper, he did not put on the Government Whips to retain it if he thought then, as he appears to think now, that this was right? Why did he surrender then? Why, having done this, has he now changed his mind?
Will he tell us what representations have been made to him, and whether he has had serious representations from the Church Commissioners, backed by threats of resignations? Will he tell us what representations he has had made to him which are causing him to make this highly salutary change, one which is absolutely inconsistent with his own action a few weeks ago?
The right hon. Gentleman has told us nothing about this. He just said that he has come to the conclusion that he must not rectify further than he must. He did not tell us what the two "musts" were—what the first "must" was that took this out and what the second "must" was that put it back. The right hon. Gentleman is not treating the House properly, nor serving his own interests by conducting this Measure in this way. For my part I would not oppose his proposal, I have said so throughout. It is absolutely right. I would like the right hon. Gentleman, as he is so volatile and flexible, to take the matter further, and perhaps reduce the limits more. I will certainly accompany him upon this path. But I think that the right hon. Gentleman 1496 owes it to the House to tell us two things: why he took it out, and why he is putting it in.
§ Mr. S. C. Silkin
I listened to my right hon. Friend the Minister moving his Amendment with a judicious mixture of sympathy, admiration and incomprehension: sympathy for the task which he has found himself compelled to take upon himself; admiration for the manner in which he has performed it; and incomprehension of the reasons which he has advanced for performing it.
It is right to say, however, that my sympathy extends to a number of hon. Members opposite, because when we remember the events which took place in Committee it will be recalled that I, who had the honour of moving the Amendment which succeeded in removing the rateable value limits from the Clause, was willing, and expressed my willingness, to withdraw the Amendment on the undertakings given by my right hon. Friend to consider the points made. But hon. Members opposite, with the sole exception of the hon. Member for Crosby (Mr. Graham Page), were so persuaded by the logic of the argument which I advanced that they refused to allow that to be done, and it was they who forced a vote. If I am the devil's advocate in this matter, then I do not know what hon. Members opposite are, because they have gone even further than the devil.
§ Mr. Silkin
As a result of the activities of hon. Member's opposite in forcing a division in order to assert the principle which I had advanced, we found ourselves with a majority of 18 to one in Committee in favour of the logic of saying that if the principle of the Bill was right it must apply universally.
I have heard my right hon. Friend's explanation of why that should not be the case. I am bound to say that if one is to be quite frank about it the real reason is not that which he has given to the House; the real reason is that it is feared that if the limits, particularly the limit for Greater London, are not reinserted in the Bill, a number of wealthy people will become very much wealthier. That is no doubt a factor to which consideration must be given.
1497 The question, however, is whether the right way of dealing with that matter is to sacrifice logic for expediency, as I put it in the article referred to, or to seek some other way of doing it. I believe that it would be right to seek a different way of doing it, and at the end of the article which I wrote I put forward a proposition to which I hope my right hon. Friend and the Government as a whole will give very serious consideration. Certain matters—not only this one but others—arise from the Bill which cause anomalies which can be put right if appropriate measures are taken. I support entirely the general provisions of the Bill. I do not think it right to adopt the methods which the Government are now seeking to adopt in simply restoring the rateable value limits.
Let me turn to the two Amendments to the Minister's Amendment which I desire to move. I move them on the supposition that—
§ 7.15 p.m.
§ Mr. Silkin
I beg your pardon, Mr. Speaker.
The Amendments to the Amendment are tabled on the supposition that the general principle of the Minister's Amendment is accepted. The Amendments in my name seek to modify the principle put down by the Minister in two ways. The first seeks to omit from the rateable value limit provisions those premises which fall within an area in respect of which the Minister has granted a certificate under Clause 19—that is to say, what is called the comprehensively managed estate. In the case of a comprehensively managed estate on which some of the property is above the rateable value limit and some of it is below, there cannot be any logic in exempting that property which is above the limit and leaving that which is below. In practice, areas which have been developed as a single comprehensive unit will have parts available for enfranchisement and other parts which are not. I therefore hope that the Minister will be able to modify the proposals which he has made in this respect.
1498 The other Amendment in my name seeks to deal with the position outside London. This is not a matter which concerns my constituency, but it certainly concerns the constituency of my hon. Friend the Member for Oxford (Mr. Luard) and areas like Cambridge. It is clear from all the information which we can get that in areas of that kind where there are large Victorian houses the £200 limit is unrealistic and unsatisfactory. The fact that it is the limit fixed by the Rent Act for other purposes is not the point. In dealing with leasehold houses, unless the limit outside London is raised from £200 to £300, there will be excluded from the benefits of the Bill a very large number of houses which are identical with houses in London which would be included.
I therefore hope that, whatever else happens about the Amendment proposed by my right hon. Friend, he will find it possible to modify his proposals in this respect.
§ Mr. Clegg
I feel compelled to speak to the Amendment because, unlike my hon. Friend the Member for Crosby (Mr. Graham Page), I was one of those who in Committee voted for the removal of the limit. I should, therefore, perhaps offer some explanation to the House about how I view the latest Amendment.
When we were considering this matter in Committee, I understood that we were debating the principle of enfranchisement. I agree with the hon. and learned Member for Dulwich (Mr. S. C. Silkin), that, in principle, if there was to be enfranchisement, it should be across the board. I may have been a little political naive because at that time the terms of compensation still remained to be discussed under Clause 9. It is true that earlier we had had some discussion on the fair compensation provisions, but we hope to convince the Minister that we should change the terms of compensation which were included in Clause 9.
When we came to Clause 9, the right hon. Gentleman was adamant and refused to amend the principle of compensation which he had set out earlier and which we have heard referred to today as "the tenant's bricks and mortar principle." It seems to me, therefore, that the compensation provisions in the Act are unfair and that, as a result of the last Division, it is unlikely that they will be changed to any degree at this stage.
1499 As a believer in enfranchisement, I had hoped to see a Measure before the House dealing once and for all with all the problems arising from the long leasehold at low rent system. It appears now that we shall not get that. Should I, therefore, support this Government Amendment, because I believe in enfranchisement right across the board?
I believe that the provisions in the Bill for compensation are confiscatory, and I feel, on balance, that I should vote for the Amendment because it would limit the confiscatory terms of the Bill. I am disappointed at having been put in this position, because the right hon. Gentleman has had ample opportunity to bring forward a major reform which, if he had put fair compensation provisions in the Bill—
§ Mr. Speaker
Order. I have listened to the hon. Gentleman with great interest. I am not quite as naïve as to allow a debate as wide as that. He must speak to the Amendment.
§ Mr. Clegg
Mr. Speaker, I will of course bring myself back to the subject of the Amendment.
The result of bringing back the rateable value limits is that the system will survive and will grow, because landlords who have properties about those limits can again enter into the same type of contract. However, with my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), I wonder why the Minister has changed his mind. The explanation which he gave today did not satisfy his hon. Friends and it does not satisfy me. What influence has the noble Lord, Lord Cadogan, on the right hon. Gentleman and his Party—
§ Mr. Clegg
—in contrast to the noble Lord, the Earl of Bute? I cannot think why the Government should want to see one noble Lord in one situation, and another noble Lord in another.
I am completely mystified about the motives for the change. Nothing that I have heard today indicates why it has happened. Before the debate comes to an end, I hope that the right hon. Gentleman will let us know. To those outside the House, it must look very strange. We 1500 should like to know what siren voices have been singing, if not in his ears, in those of many of his right hon. Friends in the Cabinet who have come to this decision. We should like to know what the voices were and what they were singing, because then perhaps we shall be able to vote on this matter with more knowledge.
As I have said, I felt compelled to speak and to define my attitude. In the end, I think that it has been logical, but perhaps it has taught me a poliotical lesson which I shall remember in future.
§ Mr. Luard
Discussion of these Amendments is central to discussion of the Bill as a whole, because they raise in the clearest form the principle upon which the Bill is based. In describing that principle, I cannot do better than quote what my right hon. Friend the Minister of State said in moving the Second Reading:… all past experience points to the conclusion that no real solution will be found unless we rectify the fundamental injustice of the leasehold system. This fundamental injustice arises because under the leasehold system the landlord is entitled—indeed, has the impertinence—to take free of charge the house and the improvements created".Later, he added:… surely then it is fair that the leaseholder —the owner-occupier—should have the opportunity to buy from the landowner the freehold of the land upon which his house has been built."—[OFFICIAL REPORT, 7th March, 1967; Vol. 742, c. 1274–5.]The basic principle which the Minister has defended many times is that the buildings should belong to the leaseholder and the land to the freeholder.
Most of the 18 hon. Members who voted in favour of the Amendment in Committee did so in the belief that, if that principle was right and just in the majority of cases of leaseholds, it was equally right and just in all cases. We were by no means convinced that any of the arguments put forward previously for making certain exceptions held any validity.
It is clear that the Government have not been prepared to accept that this is a universal principle which can be applied in all cases and, regretfully, most of us have come to the conclusion that we must accept unwillingly that certain exceptions will be made. However, what we have 1501 the right to expect is that, if exceptions are made, they will be based on some clear, logical and understandable principle. In particular, we have the right, first, to expect that the provisions which are made shall not discriminate unfairly between one part of the country and another. I would submit as strongly as I can that the present proposals discriminate most unfairly between London and the provinces.
The Bill makes the quite unwarranted assumption—admittedly one inherited from some other provision, but no more logical nor reasonable for that reason—that rateable values in London on average are something like twice the level of those in the provinces. I would submit that there is no justification in fact for that assumption, and there are certain facts which one can quote which give some plausibility to that contention.
One can see this to some extent from the effect of the Bill in different parts of the country. In London, except for the areas of central London where rateable values are extremely high and where certain properties are well above the limits for London set down in the Bill, there are few properties which are excluded by the limit of £400. In the constituency of my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin), which contains a great deal of leasehold property in the form of large houses of a considerable size which are owned and occupied by fairly wealthy middle-class people, virtually none is above the rateable value limits set down in the Bill.
That does not apply to the limits set down for the provinces, because there are certain areas in the provinces where substantial numbers of houses are excluded by the present limits. My own constituency is one of them. It is by no means alone, because Cambridge is in a similar position, where something like one-sixth of the leasehold houses will be excluded under the terms of the Bill. There are also a large proportion in Birmingham. In the case of Oxford, I have clear evidence which conflicts with that which has been given by the Minister, and it is some information from the Bursar of St. John's College. Hon. Members will know that the majority of leasehold property in Oxford is owned by St. John's College. A few days ago—after the terms of the Bill become known—the Bursar 1502 made a speech in Oxford, in the course of which he said, referring to the restoration of the limits previously set down:In Oxford, this will mean that about 250 of St. John's total of 1,300 tenants will not be given the right to compel the college either to sell them the freehold of their homes or to grant them a 50-year extension of their leases.In other words, something like a fifth of those houses will be excluded under the terms of the Bill.
It is thus a fatal defect of the present limits that they discriminate unfairly between one part of the country and another by the arbitrary and false assumption that rateable values in London on average are something like double those in the provinces. One thing which I think we have the right to expect in legislation of this kind is that if exceptions are made they will, in a logical way, meet the difficulties with which they are designed to deal.
There are three main difficulties which have been suggested as the reason for having some kind of limit. The first is one which the Minister has given several times in the past, and he repeated it again today. In fact it is the only one that he mentioned today, namely, that if it is necessary to interfere in an existing legal contract, this should be done only to meet the cases of greatest hardship. I respectfully submit that this argument has no validity when considered in the context of many of the properties in the provinces. I think it is true to say that in my constituency one cannot distinguish in any meaningful way between the hardship being suffered by people living in houses with a rateable value of more than £200 and those in houses with a rateable value of below that figure.
I would like to quote from one of many letters which I have received. It is from someone who lives in a house which is rated at just over £200:The rateable value of my house is £206. A few doors away from me, in the same street is an almost similar house, but with one or two fewer rooms, whose rateable value is just under £200 …and he later explains why. He then says:Since buying the house I have spent something like £2,000 on maintaining and improving it.1503 Does the Minister maintain that it is just that this householder should be penalised, should be deprived of the opportunity of acquiring his leasehold under the terms of the Bill, because he has been public-spirited and proud, and has taken the trouble to maintain and improve his house and in doing so has increased its rateable value?
I referred earlier to 250 houses which are owned by St. John's College, excluded by the Bill. But these are all basically similar houses. They are fairly large houses and the fact is that those living in houses with a rateable value of more than £200 will suffer just as much hardship as those living in houses with a lower rateable value. If they are deprived of their houses on the expiry of the leases, which will be fairly soon, they will be placed in considerable difficulty, because there is an acute shortage of housing in Oxford. Many of them will be able to find only leasehold houses in the area, and they will thus suffer real hardship. I therefore do not believe that the Minister's argument holds good when considered in relation to conditions in many parts of the country.
The second argument which has been used by the Government is that they decided to reimpose the limit because unless they do so there will be a substantial windfall gain for some of the tenants of the larger houses who will be able to sell the properties at a substantial profit. I cannot say how far this is true in London. It may be that in central London there will be an opportunity for making substantial profits of this kind, but I do not think that there will be any significant windfall gains in Oxford or in other areas. Certainly any gain which is made will be no different from the gain which will be made by selling houses with a rateable value of less than £200. As I said during the Second Reading debate, the tenants of these houses will have to pay a substantial sum for the land, with development value, on which they are situated.
§ Mr. Eric Lubbock (Orpington)
Does not the hon. Gentleman think it rather significant that the Minister did not mention the windfall gain argument in his speech at the beginning of this debate? It is for this reason that one is entitled to assume that this could be dealt with 1504 by an Amendment somewhere else in the Bill.
§ Mr. Luard
I agree with the hon. Gentleman. Many of us have suggested to the Minister that, if this is an important argument, it can be met by other means, and is in no way a sound reason for depriving many leaseholders of the right of enfranchisement. I do not think that there will be any substantial windfall gains for tenants in Oxford, and certainly the gains from the two types of houses will in no way be distinguishable.
The final argument which has been used, and it has been aired in the Press and elsewhere, is that the comprehensive redevelopment of some large estates will be made impossible if all leaseholders are given the right of enfranchisement. I do not believe that this argument holds good for any area outside central London. It may hold good in Belgravia. If one gave the right of enfranchisement to the tenants of all the properties in an area of larger properties, it may be that comprehensive redevelopment would not be possible. But this holds good only if all the properties on the estate are above the limit. There are many estates with houses below the limit, and therefore this again is not really a valid argument.
What I think these three arguments show conclusively is that if a distinction is to be made, it cannot be made between different parts of the country, or between London as a whole and the provinces, but only between central London, with the kind of rateable value which is normally prevalent there, and every other part of the country. The rateable value limits in the Bill are inappropriate to the purposes of the Measure, and the kind of exceptions which it wishes to make. But, above all, it discriminates unfairly between London and the provinces because it assumes a relationship in their rateable values which does not exist. It is for this reason that I tabled an Amendment asking for a uniform level of rateable value for the country as a whole. If the Government wish to impose a special limit for central London I have no objection to this being done, but the kind of considerations which apply to most parts of London—in fact some parts of London have a rateable value below that which applies in Oxford, and Cambridge, and certain other areas—apply 1505 to other areas as well. I therefore submit that a uniform principle should be applied for all parts of the country except central London, namely, £400.
§ Mr. Hooson
I shall not follow the hon. Member for Oxford (Mr. Luard) in what I thought was an unanswerable case for the limit of £400 to be applied to the whole country, but the logic of his argument was that there was no reason for any limit at all. I did not have the advantage of being a member of the Committee, and I therefore did not witness the 18 to 1 vote. I am aware of the great Willey principles, but I suspect that the debate today is connected with the performance of double somersaults because I cannot see that the right hon. Gentleman made any case for going back to his original contention that there should be limits.
If he is concerned, as he has said he is, with putting forward a principle for the abolition of leasehold, or the enfranchisement of leaseholds, what justification is there for the imposition of these limits? The hon. and learned Member for Dulwich (Mr. S. C. Silkin) said that he sympathised with the right hon. Gentleman because he was compelled to do this. I did not understand what the hon. and learned Gentleman was referring to. What is the compulsion? Who has applied it? Is it because of compulsion, or persuasion by the hon. Member for Crosby (Mr. Graham Page)? He is an extremely compelling, if not a persuasive man. Or is it the influence of the Church Commissioners? The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) seems to have some inside knowledge. What is it that has caused the Minister to change his mind?
In an earlier debate on an Amendment to exclude charities the Minister said that there was no reason for drawing distinctions. The right hon. Gentleman is drawing a distinction if he says that no hardship is involved in the case of those who occupy houses with a rateable value of more than £400 in London and £200 in the provinces. It may be equally argued that there is more hardship for a charity than for a private landlord. The right hon. Gentleman refused to draw a distinction. He must be aware that when, for the second time in succession, he is congratulated from the Conservative 1506 benches upon a return to sanity, there is something wrong with the Government.
§ Mr. Boyd-Carpenter
I did not go so far as that. I suggested only that the right hon. Gentleman had passed from complete unconsciousness to a state of semi-coma.
§ Mr. Hooson
If the right hon. Gentleman reads the OFFICIAL REPORT tomorrow I think that he will find that he revised his opinion. He first congratulated the right hon. Gentleman on a return to sanity and then he qualified it.
The right hon. Member for Kingston-upon-Thames regards the Bill as malicious and confiscatory. That is a typical attitude of those who have benefited for many years from a malicious and confiscatory system. The Bill is calculated to put right a system which we regard as iniquitous and which is of itself malicious and confiscatory, in respect of the money that is always made when a lease falls in. If regarded in the proper light, is it not confiscatory to impose a penalty for the renewal of a lease? What justification has the right hon. Gentleman for going back on the principle he accepted in Committee, of imposing these limitations?
If we consider the speech made by the hon. Member for Oxford we see that the right hon. Gentleman has not begun to justify this return to so-called Conservative sanity. I hope that hon. and right hon. Gentlemen opposite who voted in favour of no limitations in Committee will have the courage of their convictions and go into the Lobby to vote against the right hon. Gentleman. I have yet to hear from the Conservative benches any true justification for anyone going back on his vote in Committee.
§ Mr. Hamling
Like my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin), I have great sympathy for my right hon. Friend on this occasion. I shall proceed to tell the House why. It must be difficult for any Minister to present, on Report, a change in the Bill. I must admit that the Government have asked for this. Before the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) starts smirking about it he might tell us what his personal view is on this matter. He is supporting the Government Amendment. I do not see 1507 what he has to giggle about. His speech was a nice exercise in party politics, and one could understand that.
§ Mr. Boyd-Carpenter
The hon. Member asked what I had to laugh about. I do not giggle, incidentally. I will tell him. When a Minister in charge of a major Bill votes one way in Committee and, within a matter of weeks, moves an Amendment to reverse his own vote a little merriment is surely permitted for those who are not among the right hon. Gentleman's unqualified admirers.
§ Mr. Hamling
So long as we can put it down to innocent fun that is all right, but we are not having innocent fun on this Bill. Having said that, we can dismiss the right hon. Gentleman's speech. It was not a contribution to the debate.
We are concerned with the logic behind the various Amendments. The Government have got themselves into this mess. They have given the impression that they have given way to the big vested interests in estates. I know that this is not true, and I will tell the House why. The Government have not given way to them; they have given way to other points of view. They have given way to the Socialist point of view—and the Socialist point of view is that the Bill as it stands provides for large capital gains to be made by people who are already very wealthy. That is why the Government have moved the Amendment.
§ Mr. Hooson
In that case, does not the hon. Gentleman think it rather odd that the Minister did not give this reason in his speech?
§ 7.45 p.m.
§ Mr. Hamling
I am reading the Government's mind in this matter. I am more entitled to do so than any hon. Member opposite. I do not give much credence to hon. Members opposite who always see outrageous motives behind any change in Government policy. In this debate they have given evidence that they suspect that the Government have given way to base pressures from big financial interests. I do not accept that. That does not mean that I think that the Government are right.
Amendment No. 5 provides for a limit, for the very good reason that some people 1508 would make big financial gains out of the Bill if there were no limit. Anyone who who reads the report of the proceedings in Committee will discover plenty of evidence, in the speeches of hon. Members opposite, to support this view. It is a proper point of view to consider and a proper possibility to guard against.
On the other hand, there is some logic in saying that there should be no limit. That is the point of view that I put upstairs. In any case, there is a certain illogicality in the Bill itself. It is a basic thing in this Bill. I do not know why the right hon. Member for Kingston-upon-Thames should find that amusing. Many things in our lives are illogical, but we find them very attractive. That is one reason why I find the Bill most attractive. It is illogical in that it gives a leaseholder a right which hitherto the law has never permitted him to have. The Bill provides a breach of previous contracts. To that extent it is illogical. Nevertheless, we must ask ourselves how far we ought to modify this illogicality.
Amendment No. 5 provides for a limit of £300 outside London and £500 inside. There is more logic in that than in the Government proposal. My hon. Friend the Member for Oxford (Mr. Luard) has referred to Oxford, and I want to refer to other places outside London. I can think of certain properties in Liverpool whose rateable values exceed £200. The hon. Member for Crosby (Mr. Graham Page) will know them very well. I can think of some properties around Liverpool Cathedral which are leasehold and whose rateable values in many cases are over £200.
I can think of certain parts of London—not Belgravia; not in the Golden Square Mile but in more humble places, as in parts of my constituency—in which houses have rateable values exceeding £400. This applies even in Hampstead, where leaseholders have as much right to be enfranchised as those just below the £400 limit, and that is the reason for the Amendment—
§ Mr. Murton
The hon. Gentleman said earlier that there should be a limit and now says that he proposes one. Why, in Committee, did he vote against any?
§ Mr. Hamling
I have been persuaded by arguments since Committee that some sort of limit is reasonable because some 1509 people would make profits of £15,000 or £20,000. These people are not the normal leaseholders whom those of us who favour this enfranchisement have in mind They are a very small percentage—
§ Mr. Ben Whitaker (Hampstead)
Could not that difficulty be simply cured by some fiscal measure? Are not the inhabitants of all these leasehold houses as entitled to security of tenure after having lived there for many years with their families as anyone else? That is what they want—security of tenure—not a large capital gain.
§ Mr. Hamling
I am not sure that I have all that much sympathy with people who will receive capital gains of £20,000. I do not think that I was sent to Parliament to look after the interest of such people or that the Labour Government were elected on the basis that they should give justice to millionaires.
There is some illogicality about this, but one must draw the line somewhere. I have been persuaded that some limit is reasonable but the limits in the White White Paper, which are embodied in the Bill and to which my right hon. Friend is returning, are not high enough. We have suggested a modest increase which ought to be supported by the Government and commend itself to hon. Members opposite. That is why we framed the Amendment so moderately.
§ Mr. Percy Grieve (Solihull)
The Minister's plight in seeking to defend the Government's change of attitude reminded me of that of Saint Lawrence on the gridiron. Whichever may he turned he was likely to be grilled, both from his hon. Friends and from hon. Members this side.
The reason is not far to seek. On his own side, the hon. and learned Member for Dulwich (Mr. S. C. Silkin) and the hon. Members for Oxford (Mr. Luard) and Woolwich, West (Mr. Ham-ling) naively assume that the Bill is founded on a principle. I do not know what the principle can be, except that it is sometimes desirable for Government to procure the support of some people by giving other people's property away 1510 to them. That is what I and my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) see in the Bill.
The hon. and learned Member for Dulwich and the hon. Member for Oxford seem to believe that the Bill is founded on the principle that the bricks and mortar, for some curious reason, belong to the leaseholder, whereas the land on which the house stands belongs to the freeholder. How that can possibly apply in the many cases of houses built by the freeholder passes my comprehension—
§ Mr. S. C. Silkin
As the hon. and learned Gentleman regards the Bill's principle with such abhorrence, did he and his right hon. Friend vote against the White Paper and the Bill?
§ Mr. Grieve
No, I did not vote against it, but I have been careful to express my opinion about it on every occasion, and I do not hesitate to do so now.
How the Bill can be founded on a principle which is belied by the facts of the leasehold system passes comprehension, but if it is founded on any principle it should clearly be applied to all houses, because justice should not be for only one section of the community but for all. Whether a man is rich or poor, he should have justice. I believe that I came here to represent all my constituents who elected me, whether rich or poor, and not just one section, as the hon. Member for Woolwich, West boasted just now that he did—
§ Mr. Grieve
I see no principle in the Bill beyond a squalid attempt to purchase the support of one section—
§ Mr. Deputy Speaker (Sir Eric Fletcher)
Order. As I understand, we are not discussing the principle of the Bill but a rather narrow Amendment about what the limit should be.
§ Mr. Grieve
I apologise, Mr. Deputy Speaker. The debate has proceeded on the question of principle, but I should not have wandered too far.
The Bill is not founded upon principle, which is why I welcomed the Minister's last minute repentance. At least some people will be spared from having their 1511 property taken with inadequate compensation, although they may be a comparatively small proportion of freeholders and owners of ground rents. To that extent I welcome the Minister's action, but I am shocked at the lack of principle behind the concession which the Minister made to his hon. Friends in Committee and now behind the withdrawal of that Amendment and the reinstatement of the property limit.
I welcome that reinstatement, because it will save from being broken up the great urban estates which have done so much for the development of our major cities and because it is a concession to some individuals whose property will not be taken away with inadequate compensation and given to other people. If people are taken in by this and accept the gifts brought to them with inadequate compensation, they will rue the day, because this kind of inroad into the contracts and rights of ordinary citizens cannot lightly be made.
The hon. Member for Oxford was right to say that there was one way of dealing with the situation which the Minister has had to deal with and I understood him to mean that adequate compensation should be given. If the Minister were to give adequate compensation, it would destroy the Bill's purpose, which is to buy the support of one section of the community at the expense of another.
§ 8.0 p.m.
§ Mr. Roland Moyle (Lewisham, North)
I shall speak briefly, because my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) and my hon. Friend the Member for Oxford (Mr. Luard) have already spoken ably for myself and my hon. Friends, but I want to underline the very strong feeling there is on this side against the reimposition of the rateable value limits and to make a last attempt to persuade my right hon. Friend to change his mind and drop this Amendment. Before doing so, I have two things to say. First, I am not running a constituency interest in any way. In the whole borough of Lewisham there are only two houses that have a rateable value of over £400, and neither is in my constituency. I intervene purely on a matter of principle, because I believe that there is a principle in the Bill.
1512 I have sympathy with my right hon. Friend, because I was a member of the Standing Committee and can remember the circumstances in which the rateable value limits were eliminated. The hon. and learned Member for Solihull (Mr. Grieve) may be interested to know that it was not a concession to my side of the Committee but to him and his hon. Friends. I remember my right hon. Friend urging caution on the Committee before it was caught up in what I can only describe as a great wave of emotion which swept the rateable value limits from the Bill as it then was.
One principle in the Bill is that if there is a wrong type of contract covering the leasehold relationship it should be put right, not only in connection with properties having a rateable value below the limit, but those where it is above. That has already been stressed this evening, and I will say no more about it.
Another principle runs through the Bill. We advance the proposition that a house is not just a total of legal relationships that can be enshrined in the leasehold contract but is an essential part of a family home. We have tried to recognise this in the Bill. If a house below a rateable value of £400 in London is a home for someone, the same principle must apply to people who live in houses with a rateable value above that figure.
Here I am very disappointed to say that I take issue with my hon. Friend the Member for Woolwich, West (Mr. Hamling), with whom I so often find myself in agreement. I believe that I was returned to this House in the national interest to look after the sort of people to whom my hon. Friend referred as well as others—
§ Mr. Moyle
I represent no millionaires, but I have said that in intervening in this debate I do not intend to run any constituency interest but to take my stand purely on principle.
In many parts of the country, if someone has built a garage and attached it to his house, he is a public benefactor. It is true that he may have many motives in doing so, but if he takes his car off a road that is probably already choked with parked cars he has made a contribution to the public welfare. He is 1513 already penalised to some extent by paying higher rates, but if he then finds that he has also put his house beyond the confines of this Bill, it will be a bitter pill to swallow—
§ Mr. Whitaker
Perhaps I can cite an actual case to my hon. Friend. A constituent told me that because of his initiative in putting up a garage in recent years the rateable value of his house is now just over £400. Are Her Majesty's Government really advising my constituent to go out and pull down that garage with his bare hands? That is really what they are asking.
§ Mr. Moyle
That was exactly the kind of thing I had in mind in saying what I did. I am only too happy to find practical examples that can be quoted. However, I hope that in the interests of the community my hon. Friend's constituent will not tear down his garage with his bare hands but will retain it.
I do not take the extreme view that reimposition of these rateable value limits will destroy the whole benefit of the Bills but it is an inconvenience and an irritation. The Government have gratuitously handed a weapon to those right hon. and hon. Gentlemen opposite who have always take the view, utterly wrongly, that this Bill is a looting operation. It will just make it a little more difficult now for us on this side to defend the Bill as a matter of principle, and just a little more easy for the hon. Member for Crosby (Mr. Graham Page) and those who think like him to attack us. But it would be wrong to go quite as far as did my hon. Friend the Member for Oxford (Mr. Luard), who said that the Amendment went to the heart of the Bill. Many thousands of leaseholders will continue to get substantial benefits from rectification of inequity contained in it.
I see one small ray of light on the horizon. In advancing the case for reinserting the rateable value limits, I thought my right hon. Friend made it perfectly clear that he had been in no way influenced by the campaign which had been run by the Cadogan Estates, and their allies in the west of London and elsewhere—
§ Mr. Moyle
Well, does the hon. Member really think that my right hon. Friend has been influenced by them? Did he say he had? There is a perfectly recognisable influence on the maintenance of the amenities. It is that all these estates depend in the ultimate on the desire of the tenant of the house to maintain it and to maintain its value with its amenities, and any services provided by the landlord are incidental. That applies throughout the whole range of leasehold properties.
When I was a lad, we used to go to birthday teas. When we went to birthday teas, we consumed buns. When we consumed buns, there were some that had little bright red cherries on them. I do not think that those buns tasted any better than the other sort, but they were always the more popular. What the Government have now done is to spoil the whole look of this bun by removing the cherry from the top of it.
§ Mr. Lubbock
There have been some extremely curious propositions advanced this evening, including that of the hon. Member for Lewisham, North (Mr. Moyle), who says that when a Minister maintains that he has not been influenced from any quarter one can take his word for it. The Cadogan Estates and the other big landlords have been waging an active campaign behind the scenes, perhaps not directly with the Minister—I dare say they have not approached him personally—but no doubt with the officials of the Ministry there has been a great deal of coming and going, the big landlords have got their way, and I greatly regret it.
The other very curious thing was the statement made by the hon. Member for Woolwich, West (Mr. Hamling) that it did not matter if justice was not done to people above a certain income level. That is the most curious and abhorrent doctrine I have ever heard expressed in this House. I hope that on reflection he will agree that this is not really his view and that he only said it in the heat of the moment.
§ Mr. Hamling
If the hon. Member reads my remarks, he will see that I am against people making very big capital gains. That is my objection.
§ Mr. Lubbock
If the hon. Member had said that I would have agreed with him, 1515 but it has already been shown how that can be taken care of in another part of the Bill. The hon. Member also said that he was not concerned with justice for millionaires. I am concerned with justice for every citizen no matter what his income. By reinstating these rateable values from the Bill the Minister has not only harmed millionaires but others.
§ Mr. Hamling
Does the hon. Member say that it is just for wealthy people to make very big capital gains?
§ Mr. Lubbock
I have already stated my view on that. It is quite possible to put it right in another part of the Bill. It was highly significant that the Minister did not use the argument about the enormous uncovenanted gains by millionaires to alter these limits. He has tacitly admitted that this is no longer a point in the Amendment before the House.
The third extremely curious proposition was that by the hon. and learned Member for Solihull (Mr. Grieve), who suggested that however violently one may oppose some Measure introduced by the Government it did not matter if one did not cast a vote against it in the Division Lobby. I always thought that one of the most important duties of hon. Members when they thought the Government wrong was to register that belief by going through the Lobbies. I am sure that the Leader of the House will be glad to hear this new theory because it may be a means of saving time.
As to conversions, the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was quite amusing, but he did not get to the nub of the problem. The Foreign Secretary, with whom he compared the Minister, was converted yesterday, but he is not actually a convert, he is an apostate. The Foreign Secretary has made only one somersault, whereas the Minister has made two. From my reading of the hagiographers and theologists I find no example, not even that of St. Lawrence on the gridiron, to compare with this. I do not think that when St. Lawrence came off the gridiron he lapsed into the pagan faith again as the right hon. Gentleman has done.
What the hon. Member for Oxford (Mr. Luard) said was not only relevant 1516 to the £200 rateable values with which he is concerned in his constituency, but to any limit we might mention. There will always be a difference between those who are just below and those who are just above the limit. A person who is just above the limit may have spent a large sum of money on a house which has put it just above the rateable value which has been chosen. The hon. Member was advancing an argument, not against the £200 as it applies to his constituency, but against any greater value limit in the Provinces as well.
Let us look at the comparison between the principle here and that in the Rent Acts from which these limits derive. I can claim to speak with knowledge of those Acts, because I was on the Rent Bill Committee. I was convinced by the arguments of the Leader of the House, who was then Minister of Housing and Local Government, about the limit of £400 in Greater London and £200 in the Provinces being perfectly right and proper. One reason was that we had had a recent survey by the Milner Holland Committee which found plenty of housing available in Greater London with a rateable value of £400 or £500.
That meant we were in the context of an arm's length market and not of an artificial forcing up of rents by reason of scarcity element. The Minister went on to say that £400 in Greater London and £200 in the Provinces were slightly higher limits than were strictly necessary, but that was deliberate and intentional because it was necessary to have some reserve in the open market to see that the rateable value was appropriate lower down. These were all very carefully detailed arguments which have been entirely absent from our discussion this afternoon. All that the Minister has said is that he has taken these limits from the Rent Act, 1965, and that because they are in that Act they must be in this Bill.
Two entirely different arguments apply. We are not concerned with problems of scarcity and ensuring that we have property within these rateable limits and the other considerations which led to the presentation of the legislation to the House by the Government in 1965. We need an entirely separate justification of these rateable value limits based on first principles. The Minister owes it to the 1517 House not merely to pass figures from one Measure to another when they have no relevance whatever in the context of leasehold property.
I agree with hon. Members who have said that an absence of rateable value limits in this Bill is vitally necessary to preserve logic and consistency. I disagree with the hon. Member for Woolwich, West, who likes to import a little illogicality to our debates. We should examine the facts and come to a logical conclusion. By doing what he has done this afternoon the Minister has been making the House a laughing-stock. I hope that he will not succeed in his attempt but that hon. Members on both sides of the House who object to this volte face will join us in the Division Lobby in opposing it.
§ Mr. E. Rowlands (Cardiff, North)
I can follow the hon. Member for Orpington (Mr. Lubbock) in his latter comments because I was one of the 18 who in Committee supported the removal of the limits. With the hon. Member for Basingstoke (Mr. David Mitchell), the hon. Member for North Fylde (Mr. Clegg), the hon. Member for Hornsey (Mr. Rossi) and others I supported the move to get rid of the limits.
I found it a little unconvincing because I see so much eye to eye with him on leasehold matters that the hon. Member for North Fylde said that he would not have voted for the Amendment had he known the confiscatory nature of the compensation provided for in the Bill.
§ Mr. S. C. Silkin
Will my hon. Friend allow me to assist him on the point he has made? Does he recall that when the matter came to a vote the hon. Member for Crosby (Mr. Graham Page), who had not then intervened in that debate, said that in view of the circumstances he would intervene and that he wished it m be known that he would vote against the Amendment for the very reason that he objected to the compensation principles in the Bill. None the less, all the other hon. Members of his party voted in favour of the Amendment.
§ Mr. Rowlands
My hon. and learned Friend is quite right in his description of what happened. The hon. Member for Hemel Hempstead (Mr. Allason), who is on the Opposition Front Bench, did 1518 not associate himself with the remarks of the hon. Member for Crosby (Mr. Graham Page). We are all in this together and we can support each other on this Amendment. The hon. Member for North Fylde said that he thought the Minister had been hearing voices. I regret that apparently he has not heard our voices. The Minister contends that there is a need to limit the rectification of the contract and that we should make sure that the rectification does not also cause hardship.
My hon. Friend the Member for Oxford (Mr. Luard) gave conclusive proof that hardship would occur in cities such as Oxford and Cambridge. I believe that certain types of property and leaseholder would be discriminated against. My hon. Friend cited the example of someone taking active steps to improve the quality of his house and thereby raising its rateable value.
I want to cite the case of a small but important group of people in my constituency who should not have been excluded from the terms of the Bill. I cite the instance of an oldish Victorian house, not an investment property as such, in which the family has lived for many years. The children have now left home and the husband and wife are living in a house which is larger than they require. It is leasehold property. They take the sensible and socially laudable course of letting off the first and second floors. They live on the ground floor as owner-occupiers. If they lived in the house on their own, the rateable value would not be anywhere near £200, but, because they have decided to let off the two upper floors, the total rateable value is £202, made up as follows: the rateable value of the part they occupy is, perhaps, £70; the first floor is worth £70; the second or top floor is worth £62.
This type of person and property will, if the limits are included, be excluded from the terms of the Bill. This type of leaseholder should not be penalised. In every sense of the word, he qualifies under the terms of the Bill. He qualifies in that he has lived in the house for a long time. He qualifies in the general sense of the type of lessee or leaseholder we are interested in, a person who in every sense of the word owns his house. He may have built it himself, or he may have bought it from a building contractor. 1519 In every sense of the word he is a leaseholder under the terms of the Bill. Yet, because of the rateable value restriction, he is excluded. I should like to see the rateable value limits deleted. If nothing else, I would like the Government to take special note of this type of property and leaseholder.
The whole business of rateable value limits is absurd, because we are also asked to approve an Amendment to provide that the time at which it is to be judged is 23rd March, 1965. Properties which on that date had rateable values, in London of over £400 and in the provinces of over £200, are to be included in the terms of the Bill. It may be that in 1967 a house which on 23rd March, 1965 had a rateable value in the provinces of more than £200 will no longer be so highly rated. Am I right in thinking that a leaseholder of such a house will not be able to obtain benefits? If I have a house which on 23rd March, 1965 had a rateable value in excess of £200 but which now, because of happenings in the neighbourhood, has a rateable value of less than £200, will I be excluded from the terms of the Bill? According to the consequential Amendment, I shall be.
Where is the logic of such limits? If there are to be limits, I ask the Government to think again about these limits of £400 or £200. As the hon. Member for Orpington (Mr. Lubbock) and others have said, the rateable value limits used in the Rent Act have no logic in the context of leasehold reform. No one in the House would think any the worse of my right hon. Friend if he undertook to reconsider this matter with a view to changing his mind yet again. The case has been so strongly put by both sides that this should be done.
§ Mr. Hugh Rossi (Hornsey)
I want to follow my right hon. Friend for Kingston-upon-Thames (Mr. Boyd-Carpenter) and plead very mixed interests. I pleaded them on Second Reading—professional, personal and constituency interests. I also want to follow my right hon. Friend in some of his observations about the remarkable conduct of the Government in general and of the Minister in particular.
In explaining the Amendment, the Minister said that the Government's 1520 attitude was one of hesitation and caution. Correct English usage would substitute the words "vacillation and humbug" for "hesitation and caution". This sordid chapter in this unhappy Government's hesitation began with the White Paper published in February, 1966, in which the country was told that the basis for leasehold reform would be subject to these rateable value limits. The General Election which followed was fought on this basis.
The Conservative Party took the view that these rateable value limits were wrong and illogical. Its spokesmen said this throughout the General Election campaign. I fought this issue in my constituency. The Conservative Party stated that the compensation terms proposed in the White Paper were confiscatory and wrong. During this debate some of my right hon. and hon. Friends have, quite properly, chosen to link the two matters of compensation and rateable values. They have taken the view that, as long as the compensation remains wrong, they should seek to restrict the Bill in its operation as much as possible.
I want to concentrate for a few moments on the Government's attitude. When the Bill went to Committee, it was plain for all to see that there was an open door. During the months since publication of their White Paper, the Government had had a change of mind on this question, and it required no great inspiration for the hon. and learned Member for Dulwich (Mr. S. C. Silkin) to put down his Amendment removing the rateable value limits. Member after Member on the Government side of the Committee spoke in favour of that Amendment, and, when he replied to the debate, the Minister said:… it is right and proper that I should assure the Committee that if this Amendment is withdrawn the Government will put something down on Report to meet the wishes which have been expressed here".—[OFFICIAL REPORT, Standing Committee B, 11th April, 1967; c. 81.]The wishes there expressed were for the removal of the rateable value limits. We have all witnessed the agile but rather pathetic somersault which the Minister has had to perform in public today.
One can only inquire what has happened between the Committee stage, but 1521 a few weeks ago, and today. Those of us interested in this matter noted that, immediately after the decision of the Committee, which, but for my hon. Friend the Member for Crosby (Mr. Graham Page), was unanimous—just one vote against—there was a lull, and then, suddenly, 10 days or two weeks later, what had happened seemed to hit home. There was a spate of articles and letters in the national newspapers written by or on behalf of representatives of the larger property owners, particularly those concerned with estates in the city centres. It is common knowledge that there was intensive lobbying by these large vested interests. The Minister received deputations from these gentlemen and their representatives. We know that this went on. It is public knowledge.
Plainly, the Minister has given way to that pressure, to that political lobbying, and we now have the remarkable spectacle of the Labour Party as the friend of the large property interests of this country. I do not complain that these landlords used proper constitutional means open to them to endeavour to protect their personal interests. They used the time-honoured method of lobbying and political pressure. There is nothing to be said against them for doing it. But one must comment and express surprise that the Labour Government, with all the propaganda which they put out on class warfare lines about vested interests, should have succumbed to that pressure. I find it most remarkable. But there it is. This is the conclusion to be drawn and the lesson for the country as a whole, plainly spelt out by the events of the last few weeks.
I have a great deal of sympathy for those large property owners who fought so desperately in protection of their interests. They made their complaint on two grounds. First, they said that the provisions of the Bill are confiscatory. So they are. This side of the House fought the Bill line by line on the question of compensation. Not one opportunity was lost to try to amend its provisions on compensation and to make sure that a fair price was paid on enfranchisement of a leasehold interest. We must continue to do that. This is the attitude of my right hon. and hon. Friends, that the Bill is wrong in the matter of compensation.
§ Mr. Rossi
I bow to your Ruling, Mr. Deputy Speaker.
The effect of having the rateable value limit now so as to protect the large property interests is that we shall have one law for the small landlord and another for the rich landlord. That is what the Party opposite is doing. The small landlord owning freeholds in the less valuable properties will be subject to the enfranchisement measures of the Bill—
§ Mr. Tony Gardner (Rushcliffe)
Do I hear the hon. Gentleman aright? Is he suggesting that only small landlords own small houses, or have small houses built on their land?
§ Mr. Rossi
That does not follow, any more than the old syllogism of sailors and bellbottom trousers. I am saying that it is clear from the events that have occurred that the Government have given way to a particular class of interest, and by introducing the Amendment it is that class which they are protecting. If the arguments made by those interests are correct and the Bill is a robbery against them, they are also correct for the small men, the owners of the less valuable properties. It is equally a robbery against them.
By adopting these artificial levels the Government are making one law for the large vested interests owning the large estates of high rateable value and another law for the smaller freeholder owning the less valuable property. This is an important point, and let the Labour Party face what it is doing today by this Measure if it pushes it through. I have every sympathy with all the landlords faced with these confiscatory terms. Good luck to them if they can escape one way or the other. I should like to see fair compensation introduced.
1523 The other argument that the landlords have put forward for having this rateable value limit reintroduced is that they say that most of the areas in which there is high rateable value are in the city centres due for redevelopment as large estates, that the enfranchisement would lead to fragmentation of those estates, and that it will not be possible to redevelop the centres efficiently and economically once the leasehold interests have been dispersed. That too can be met by an Amendment making special provision for the large city centre estates where there is development potential, just as one can cure the Bill's defects concerning compensation. The way to do it is not by introducing this totally false and artificial means, and importing from another Act arbitrary rateable value levels.
§ Mr. S. C. Silkin
Is the hon. Gentleman accepting that second argument? Is he accepting that properties the rateable value of which exceed £400 are the sort of properties likely to be right for redevelopment?
§ Mr. Rossi
I am suggesting that the criteria should be kept apart. If it is right that an estate in a town centre should not be fragmented because that would hinder redevelopment, the Bill should contain a special provision dealing with that type of estate and excluding it, in much the same way as in the new Clause put down by hon. Members on this side, which the Government have not accepted. I am trying to say that to attempt to cure all this variety of problems not on their merits by special attention directed to them but by trying to have a blanket means of introducing the rateable value level is quite the wrong approach and will lead to greater hardship, unfairness and complications throughout.
Let us consider what this rateable value level means. Hon. Members opposite have pointed out that there will be considerable hardship in marginal cases. One example is of a leaseholder with a house rated at £199 outside London and his next door neighbour with a house rated at £201. The leaseholder has improved his property—building a garage was one example given, and putting in central heating is another—has spent money on the building, which, according to the prin- 1524 ciples underlying the Bill is his property. But by improving the building he has taken the property outside the rateable value limits, whereas his neighbour who has not spent that money has not done so. By doing this, he has excluded himself from the right to acquire the freehold and has made a present, according to the principles of the Bill, of the improved building to his landlord. That is what happens if one accepts the philosophy of the Government as expressed in the Bill.
This is one of the illogical side-effects of the rateable values which are being introduced. But the matter is far more fundamental. At risk of boring the House, I want to refer to a decision of the Court of Appeal which was reported in the All England Law Report, 1965. This was the famous case of Peachey Property Corporation against Paddington Valuation Officer. It was fought in the High Court and in the Court of Appeal shortly after the introduction of the 1963 valuation list, because the owners there of certain properties felt that the rating officer had unfairly rated purpose built flats in contrast with houses. They sought the issue of a writ of certiorari and mandamus in the High Court to quash the 1963 valuation list on the basis that it was bad in law.
The court in this case had to go very carefully into the whole question of valuation procedures in order to see how the rateable values were arrived at by valuation officers. I want to quote the observations of two Lords Justices, because these comments on our valution lists and rateable values are pertinent to the debate, for here we are seeking to exclude certain people from what the Government call the "benefits" of the Bill by the use of a particular yardstick. Let us see what the courts have said about that yardstick and then we can judge whether or not this is the correct yardstick for the House to adopt.
§ Mr. Herbert Butler (Hackney, Central)
On a point of order, Mr. Deputy Speaker. Is it in order on this Amendment to discuss the whole of the rating system?
§ Mr. Deputy Speaker
It is not in order on the Amendment to discuss the whole rating system but it is in order for the hon. Member for Hornsey (Mr. Rossi) to adduce arguments derived from a judgment of the Court of Appeal in indicating 1525 why the Amendment should be objected to.
§ 8.45 p.m.
§ Mr. Rossi
I am grateful, Mr. Deputy Speaker. I want to quote first from the judgment of Lord Justice Danckwerts. It is reported on page 850 of the report:In this respect I must make some comment on the steps taken by the first respondent, in common with other valuation officers, it appears, to obtain information. The relevant Acts give the valuation officers the right to obtain information from occupiers in regard to the properties which they occupy. It is clear that there is a duty on a valuation officer to obtain information, for otherwise it is impossible for him to perform his task. For this purpose forms have been used of a standard kind for, it appears, the whole country, in which a number of questions are asked. It seems to me to be an obvious comment that there must be a duty to ask questions which are useful and are likely to produce relevant information, and not to ask questions which are quite useless, because they may result in confused or equivocal answers and are not likely to produce any useful information. In particular, questions ought to be asked which will disclose the rents which are being paid and the terms and circumstances in which such rents are paid. The forms which we have seen seem extraordinarily inept and most unlikely to produce useful and, indeed, essential information, on the matters on which the valuation officer ought to be informed. In the result the first respondent in the present case seems to have elicited very little useful information and to have neglected what useful information he did obtain. He seems to have proceeded on some preconceived theories and to have relied on comparison of other hereditaments in the area which were not sufficiently relevant in quality to be really helpful, when much more useful information was to hand, if he had taken the trouble to ascertain it. I do not say that comparison with other hereditaments"—
§ Mr. Deputy Speaker
I do not think it is. The hon. Member is entitled to quote from a judgment of the Court of Appeal as indicating why limits on rateable value are not appropriate.
§ Mr. Herbert Butler
Although it is in order, Mr. Deputy Speaker, and we must sit here and listen to a discourse about whether the rateable system is right or wrong, must we also listen to aspersions, in the guise of statements by judges, upon rating officers who carry out a statutory duty? Is this what we are here for on the Amendment?
§ Mr. Deputy Speaker
I have ruled that on the Amendment, which is concerned 1526 with whether there should be limits concerned with rateable value, it is in order for the hon. Member to give the basis on which rateable values are held by the courts not to be appropriate. There must be some limit to the extent to which the hon. Member may read from a judgment of the Court of Appeal, but in my opinion he has not so far exceeded that limit.
§ Mr. Rossi
I am coming to the end of the quotation, but I am satisfied that it was right to read it when one sees the reaction of hon. Members opposite. They do not like to hear this because it destroys their case completely so far as rateable value limits are concerned.
The learned judge went on to say:I do not say that comparison with other hereditaments is necessarily wrong but they must be sufficiently relevant to be useful. In this way, the first respondent"—this is the valuation officer producing rateable values of separate flats and houses which we are about to use to decide whether the leaseholder is entitled to enfranchise, yea or nay—produced results by the disregard of matters which were proper to be regarded and by the consideration of matters which should have been ignored.What greater condemnation could one get of this particular yardstick which the Government are seeking to introduce for judging whether a man should be able to enfranchise or not?
I will read one sentence from the judgment of Lord Justice Salmon at page 855. He said:… the applicants have succeeded in establishing is a fairly high degree of incompetence on the part of those responsible for the valuation list and that as a result of this incompetence the valuation list contains many errors.On the basis of that incompetence and on the basis of those many errors, the House is being asked to decide who is entitled to enfranchise his lease.
The Government should have the courage of their own convictions and be fair with compensation, not to be confiscatory, hold the balance fairly between leaseholder and freeholder and make sure that this Measure is then available to all leaseholders throughout the land.
§ Mr. Skeffington
Would the hon. Gentleman have the goodness to tell the 1527 House what the final result was? Was not the rating officer in fact upheld?
§ Mr. Rossi
Although the court found incompetence and error, it did not find a sufficient mistake in law by the valuation officer of such a nature as to entitle the court to say that the whole legal basis of the valuation list had been destroyed. The judges suggested that the correct move for these litigants was to appeal against each individual rating assessment to the appropriate tribunal. The fact remains that it has been clearly judicially found that the preparation of our valuation lists is a most haphazard and arbitrary exercise. It is wrong for the Government to try to found anything on these arbitrary, haphazard lists.
§ Mr. Ivor Richard (Barons Court)
I intervene in the debate because I believe that the House should hear the views of someone who was not a member of the Standing Committee. So far, everyone who has taken part in the debate, from the Minister downwards, has been a member of the Standing Committee and was present on the now famous occasion—[HON. MEMBERS: "No."]—in that case I am wrong; however, I believe that I am the only speaker from this side of the House so far who was not a member of that Standing Committee.
This is a thoroughly bad move by the Government. The history of this matter is that when the White Paper was published a number of us had reservations. As we read the report of what was happening in the Standing Committee, one at least thought that the Government were being principled and consistent, but we now find, for reasons which I do not follow or appreciate, that limits are to be restored.
There are two issues which the Government have to explain. The first is why there should be a limit at all and the second, if it is necessary to have a limit, is why the Government should have picked the limits which they have chosen. It is noteworthy that, apart from hon. Members opposite, who regard the re-imposition of limits as a victory for their side of the case on leasehold enfranchisement, no one on this side of the House has spoken in support of the Government's proposal to put limits back in the Bill and no one has approved the limits proposed. We have heard no 1528 reason in principle why the arguments put forward by my right hon. Friend himself at one stage should now be thrown out of the window.
The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), in his usual elegant and sulphurous way, asked my right hon. Friend a perfectly valid question—why, if the principle was right for £399 rateable value in London, it should become wrong at £401 in London, and why, if it was right for £199 outside London, it should suddenly become wrong at £201 outside London.
My right hon. Friend said that we must be hesitant and cautious. With the very greatest respect, hesitancy and caution are not two of the qualities which the Government were elected to pursue in this particular sphere, and they are not qualities which my right hon. Friend should put forward as excuses.
§ Mr. Willey
My hon. Friend ought not to talk about what we were elected upon, because we were elected upon the White Paper.
§ Mr. Richard
I accept that. All that I am saying is that those of us who opposed the limits rather regret the Government using hesitancy and caution in this sphere of leasehold enfranchisement as qualities which are somehow or other put forward as an argument in favour of the limits.
I do not see how the principle can be accepted of putting a limit in, whether the limit be £300, £400 or £500. What on earth is the limit there for? The principle is right, and, after all, we have, since Committee and Second Reading, tried to take a stand on principle. I have had a number of letters from constituents complaining that they feel that they have been rather misled by the way in which the Government have treated this issue. At one stage they found themselves outside of these principles, but when the Committee debates took place they then rejoiced that they were to get the benefits of enfranchisement, the same as others. I have now had letters within the last week complaining that those who thought that they were entitled to enfranchisement, and as far as I can see they were, are not now to have it.
We therefore have this extraordinary position, and I use the word, I hope, not 1529 unadvisedly, that on a matter which was originally put forward as one of principle, the Government appear to have changed their mind and, as far as I have heard this evening, can give no reason for so doing. It is not a step that I welcome.
§ Mr. Hale
The hon. Member for Barons Court (Mr. Richard) must not use the word "extraordinary" about the history of leasehold reform. If he had had 22 years of trying to get a Measure introduced, with Labour Governments, if he was in my position of recalling the battles held and the advice and instruction that I had from a Left-wing Attorney-General, who at the moment is writing to The Times as my landlord denouncing the Bill, he will understand that nothing very extraordinary does happen in this connection.
The really important thing about this Amendment is that usually nothing happens at all. I want to make that clear. I do not wish to be unkind to the hon. Member for Hornsey (Mr. Rossi), who is now absent, because most of us have had a struggle with our stomachs in these last two hours. I do not want to comment on him unkindly, but if I just said de gustibus non disputandum, we could finish it at that, except to say that quite obviously his speech was calculated to cause more embarrassment to the Front Bench opposite than to my hon. Friend or hon. Friends, because the one thing that is quite clear about this is that, whatever views there are on either side, there is not, in all these 100 Amendments put down from both sides, a single Amendment calculated to help tenants.
The arguments have all been on one side, and I cannot give my right hon. Friend any hope in this connection. The point made by the hon. and learned Member for Dulwich (Mr. S. C. Silkin) about the differing rateable value on new and developing estates is so well known, so clear and indisputable, that the case against my right hon. Friend's withdrawal of his Amendment is so strong that it is not necessary to add a word.
On the other hand, I have been very concerned this evening on one aspect, and here I must mention the hon. Member for Orpington (Mr. Lubbock), for whom I 1530 have a profound respect. Had he been here I would have told him that I learned about leasehold reform from David Lloyd George. When I was a member of the Committee on leasehold reform I could not get the Liberal Member, who remained a Member of the House up to the last election, to say a word in its favour or to cast an opinion in its favour. This is a controversial subject. I have never disputed that. What influence has been brought to bear I do not know. Often in the corridors the name has been quoted of one of the most distinguished figures in the Cabinet, a man for whom I have a profound and long-standing veneration and a respect for his character and ability perhaps verging on idolatry. But if the Archangel Gabriel with a flaming sword came to me tonight and offered to improve my golf swing, I should say that I would prefer Jack Nicklaus.
I have been in politics for a long time. I hardly recall an occasion in my political experience when a Minister has conducted such a controversial and difficult Measure, the basic principle of which was conceived in difficulty and elaborated in explanation. Although it is an admirably drafted Bill in many ways, it is one in respect of which the Court of Appeal will say that, roughly speaking, it means what the Minister said it meant. This is almost an unprecedented occurrence on any Bill in the last 10 years. But the Minister, who has supported the Measure and believes in the Measure, has presented the case with conspicuous moderation. He has today accepted two Amendments from the Opposition, either in principle or on consideration, not wholly with my support, but at least with reason and with a desire to meet every possible case which can be put. He has done this under fairly constant attack and in the face of some gibes which might not have been made with a single-minded desire to put through a major social reform.
I hope that before I go I shall see this Government put through a major social reform. I think that we are witnessing the process. Therefore, I beg my colleagues, however strong their views, to consider their attitude before they force this issue into the Lobby. I appeal to them not to add more fuel to the fire of controversy.
1531 I hope that my hon. Friend the Minister of State to the Welsh Office will treat the arguments which have been put forward with respect. It has already been said that some matters will be reconsidered in another place. I hope that we shall have an undertaking that the powerful arguments which have been deployed today will be reconsidered in another House and that we shall feel that we can, with honour, not press strong views into the Lobby tonight.
§ The Minister of State, Welsh Office, (Mrs. Eirene White)
In the famous sitting of the Standing Committee, my right hon. Friend the Minister gave the following undertaking:… we will put something down on Report that will afford the opportunity for further debate".—[OFFICIAL REPORT, Standing Committee B, 11th April, 1967; c. 82.]I think that we must all agree, after the hours that we have been sitting here, that that pledge has been amply fulfilled.
I have the utmost sympathy with the Opposition. I sympathise with those Members who happily revolted against the leadership of the hon. Member for Crosby (Mr. Graham Page) and who rushed with almost Gadarene zeal to vote with the Government on this matter and who now have to explain, sometimes—if I may respectfully suggest it to the hon. Member for Hornsey (Mr. Rossi)—at inordinate length, why they have changed their view. No one could have known that the case which he was describing was lost, but never mind.
I have some sympathy with the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who has made it clear that he has a personal interest in this matter. He would be less than human if at one moment a hope did not rise in his breast that his house would be included, only to have the cup dashed from his lips. But he may have a longer lease than I had thought—
§ Mr. Boyd-Carpenter
In fact, I have quite a long lease. In any event, in respect of any gift from this Government, I am afraid that I would say, Timeo danaos et Bona ferentes.
§ Mrs. White
That is very high-minded, but, if the right hon. Gentleman has such a long lease, perhaps he is not quite so high-minded as all that.
1532 It has been suggested that the reconsideration which my right hon. Friend said that he would give and which has resulted in the restoration of the limits included not only in the White Paper but also in the Bill as published, has been due to some kind of pressure. I say with the utmost emphasis that that is completely untrue.
It is true that the great estates, as they have been called, have made their representations, as they are entitled to do. Various people have taken perfectly proper steps to protect their interests, as they see them, and, to our knowledge, certain estates have circulated brochures, letters and so on to various hon. Members. We do not suggest that that did not happen. It did.
I can assure the House that we were not moved by the picture painted in one of the Sunday newspapers of Lord Cadogan being driven from the United Kingdom into estate speculation in the Bahamas or elsewhere. That hardly influenced us.
Turning to the special plea that the great estates have somehow to be protected, otherwise they may break up, I am sad to say that anyone looking round London is only too well aware that the fact that there may have been some historic ownership of land has not given any guarantee of the preservation of aesthetic standards. As The Times pointed out only this morning, one has only to look at Portman Square and what has happened to it. To take a slightly less aristocratic level, one of the most delightful parts of St. John's Wood was ruined when the leases fell in. One cannot take seriously the argument that there is some automatic protection if the great estates are left untouched. If that were so, it might have been a strong argument. Unfortunately, we know only too well that the great estates can fall for the wiles of developers, just as small men may do. That argument, apart from the fact that there are other arrangements in a later Clause to deal with that aspect of it, did not move us at all.
On the other hand, we were influenced to a degree by some of the wealthier members of the Socialist Party who were shocked when they discovered the enormous tax-free capital gains which they were liable to make under the Bill if the limitations were removed entirely. That 1533 was something to which we listened. When one examines the windfalls that could accrue to people with short leases in central London, the sums are such that one could not easily defend them.
In any case, it was not for those people that we have pressed over the years for this Measure. Here I speak as a Welsh Member. It was, after all, for the people in South Wales, in Lancashire, in Birmingham and in some areas of London where these conditions existed—and South Wales was the classic instance—that the Labour Party campaigned for many years for leasehold reform. Our aim was to bring relief to leaseholders who suffered from the law, not only at the moment of the expiration of the lease, but for a number of years beforehand because of the difficulties, which we discussed in Committee, such as those of obtaining mortgages, and so on.
We had them in mind, but I think my right hon. Friend made clear the very serious consideration which was given to this matter following our discussions in Standing Committee. It was this which led the Government to the conclusion that if we removed all limits, or if we put in some other ones—and various limits have been suggested, including those in the Amendments—we would find ourselves in even greater difficulty. In response to pleas from both sides, my right hon. Friend naturally said that he would look at this again. He did so. He looked at it with great care, and he has, I think, explained to the House that if we remove all limits there will he the real windfalls—
§ Mrs. White
I think not. The hon. Gentleman had a very long say in the debate [HON. MEMBERS: "Give way."] No. I am sorry, but we have taken a very long time over this set of Amendments. I understand that we wish to take the remaining stages of the Bill tonight, and I therefore suggest that we should make as much progress as possible.
My right hon. Friend made it plain that if we resolved all limits we would be in certain difficulties. If, on the other hand, we were to put in other limits, we would find that, wherever we drew the line, there would be anomalies on one side or the other. We recognise that there are difficult cases. My hon. Friends have men- 1534 tioned a number of instances, and we fully understand that anyone who is near the borderline of an administrative decision, whatever it is, is apt to feel aggrieved. We sympathise with that point of view.
On the other hand, if there are no limits, other difficulties will arise which will arouse other frustrations, particularly where there is what in lawyers' jargon is called mixed property. There will be the utmost difficulty of definition. By retaining the limits in the Bill we avoid a great deal of the undoubted jungle in which we would rind ourselves in defining mixed properties.
When my right hon. Friend made it clear that the limits were to be restored The Times called this a grand triumph for pragmatism. In matters of this kind it is not a bad thing to be pragmatic. I assure my hon. Friends, who I know feel strongly on this matter, that we have looked at it extremely carefully. We would have met the wishes of both sides of the House had we felt that we could conscientiously do so, but having looked at the matter we felt that we could not.
My hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) asked for some special exemption for premises which would be dealt with under Clause 19. I respectfully suggest to him that that kind of exclusion would not overcome the problems of the large or mixed properties to which my right hon. Friend referred earlier. As the hon. Member knows, estates which have a certificate of good management will almost always be estates with mixed properties of various kinds—some enfranchised and some not, even though the tenant would have the right to do so; some commercial and not touched by the Bill, and others properties where the tenants have decided to apply for an extension of the lease instead of enfranchisement. It is for that reason—
§ Mrs. White
I am sorry; I cannot give way to anyone. We have taken a long time. For the reasons that I have given I advise the House that the Government are not able to accept the Amendments to my right hon. Friend's Amendment.
§ Mr. Lubbock
Before the right hon. Lady sits down will she deal with the 1535 argument that I put, that the considerations in the minds of the Government when introducing these rateable value limits in respect of the Rent Act were carefully defined and based first on the Milner Holland Committee's recommendations and, secondly, the careful arguments which the then Minister—the present Leader of the House—produced from first principles. The figures of £200 and £400 were then decided upon. Is it purely coincidence that those figures happen to be appropriate in this case?
§ Mrs. White
The limits seemed to be reasonable for this case. The hon. Member said that we were not concerned with problems of scarcity, but that is not entirely so. One of the moral principles behind the Bill—and here I am speaking again as a Welsh Member—is that many leaseholders in South Wales and the people who built the houses originally had no choice, whereas those who come above the rateable value limits as suggested are better placed than those who come below the limits in the choice of their habitation.
§ Mr. Graham Page
When a Government find it necessary to legislate for breaking contracts and confiscating property, as the Minister said, we should look to the area of hardship and try to keep within it. That area is probably covered by lower figures than those now put forward by the Government—I suggest about £150 for the provinces and £300 in London. But the Minister is at least approaching the area of hardship by providing limits of £200 and £400. If the terms of compensation had been fair this problem would never have arisen. While there is unfair confiscation in the Bill, however, the Bill should be restricted to that area of hardship, and I therefore advise my right hon. and hon. Friends to support the Government in restoring these limits.
§ Question put, That those words be there inserted in the Bill:—
§ The House proceeded to a Division—
§ Mr. WALTER HARRISON and Mr. MCBRIDE were appointed Tellers for the Ayes, but no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.1536
§ Mr. Speaker
We now come to Amendment No. 7, with which we will discuss also Amendment No. 8 and the Amendment thereto, at the end to insert:Provided that that part has (or, if separately rated, would have) a rateable value on the appropriate day of more than one-half of the rateable value of the house on that day.
I beg to move Amendment No. 7, in page 2, line 8, to leave out from 'tenancy' to 'his' in line 9 and to insert, 'occupying it as'.
This is a drafting Amendment.
§ Mr. Jones
I am glad to have your assurance, Mr. Speaker.
The Amendment concerns the difficult question of a mixed hereditament, a residential property sublet not only for residential but for commercial purposes. We are dealing with the relationship of the leaseholder and the freeholder in this context.
The Government's aim is based on the fact that long leases have worked very unfairly against the occupying leaseholder, but this is not the case when a leaseholder is making a substantial annual profit from a property by sublets of any description. What justification is there for the alleged grounds of unfairness in these conditions and for enfranchisement of a leaseholder in these circumstances?
In an earlier Bill we had the complications of mixed hereditaments and ran into difficulties resulting not only from the differing rateables of mixed hereditaments but from circumstances in which separate occupancies were not separately rated. The terms of the Amendment take account of those circumstances. There is, therefore, a substantial case to be made on grounds of equity for the exclusion of this type of mixed hereditament. For that reason we ask that this aspect of enfranchisement should be considered.
§ Mr. Skeffington
The proposed Amendment to our Amendment No. 8 would have the effect that if the leaseholder had sublet part of his house he would not qualify if the sublet part amounted to more than half the house on a rateable 1537 value basis. I can well understand that there was something to be said for some proposition in this direction when the Bill was as it was before we had our last somewhat lengthy discussion, because with no rateable limits it is perfectly true that although a single property as defined in the Bill could, subject to the leasehold agreement, be held by a leaseholder, the possibilities of very considerable commercial letting would have been there. We feel, however, that with the restoration of the rateable limits a provision of this kind is unnecessary.
Such a provision is not only unnecessary but would probably create a very large number of anomalies and a good deal of unfairness. I will not weary the House with all the possibilities—I am sure that they are known to most hon. Members who have taken a close interest in the subject—but I can refer to the most obvious case of the shop with the tenant of the shop living over. By the proposed Amendment, if the leaseholder was the occupier of a shop he would no doubt be within the terms of the Bill, because he would be within the terms of the rateable limits, but it is quite likely that the shop, if let separately, would not be within the terms because the commercial or business valuation is a higher valuation in many properties.
One would then have the case where the shopkeeper, being the original leaseholder, had retired and sublet, which is the normal thing, but because the property that he might have occupied all his life, giving good service to the community, would by the Amendment be outside the Bill because he would be occupying less than half the house on a valuation basis. That is unfair and anomalous. One could understand that there was a case for the provision if the rateable value limitations had been removed, but with their restoration it does not seem necessary. The type of case I have mentioned is only one of a number in which the result would be anomalous and unfair. For those reasons, I hope that the House will not accept the proposed Amendment.
§ 9.30 p.m.
§ Mr. Graham Page
This Bill was intended to protect the long leaseholder's home, not his business. We must draw the line somewhere between commercial properties and private residences. We 1538 have tried to draw the line by the Amendment to the Amendment. It may be that we have drawn it just a fraction in the wrong place. The Parliamentary Secretary gave the example of a flat with a shop underneath, but as the Bill stands there is no line at all. The Government have not come forward with any positive proposition of how the distinction is to be made between commercial and residential premises.
In subsection (3) the Bill does not apply to premises which are ancillary to some other purpose, but that is vague. We have endeavoured to bring some sort of certainty to the Bill by this Amendment to the Amendment. I am sure that it would bring that certainty and would avoid the sort of case where the tenant may be living in a small apartment of a large house and letting off the whole of the rest of the house. Is he entitled to the franchise or not? It is impossible to tell as the Bill stands. How does one distinguish that case from the case of a guest house, a boarding house or an hotel? Is the letting off of the rooms ancillary to the residence, or is the residence ancillary to the letting of the rooms?
I regret that the Government have come forward with nothing positive but merely with a negative statement that the line suggested in our Amendment is not in the right place. If we could have a positive suggestion of how the courts are to determine whether the tenant is entitled to franchise or not it would be far more satisfactory.
§ Mr. Speaker
The hon. Member has exhausted his right to speak. The Amendment we are discussing is in the name of the Minister. The hon. Member spoke on his Amendment but did no: move it as it was not selected.
§ Mr. Speaker
Order. I know the hon. Member wanted to comment on what the Parliamentary Secretary said but we are on report and the hon. Member has exhausted his right to speak. I am terribly sorry.
§ Amendment agreed to.1539
Further Amendments made: No. 8, in page 2, line 11, leave out from beginning to 'and' in line 14 and insert:
(a) references to a person occupying a house shall apply where he occupies it in part only:
No. 9, in line 26, at end insert:
(4) In subsection (1)(a) above, 'the appropriate day', in relation to any house and premises, means the 23rd March 1965 or such later day as by virtue of section 43(3) of the Rent Act 1965 would he the appropriate day for purposes of that Act in relation to a dwelling house consisting of that house.—[Mr. Skeffington.]